Subrogation is a concept that's well-known among legal and insurance companies but rarely by the customers who hire them. Rather than leave it to the professionals, it would be in your benefit to comprehend the nuances of how it works. The more you know, the better decisions you can make with regard to your insurance policy.
Any insurance policy you own is a promise that, if something bad occurs, the insurer of the policy will make restitutions without unreasonable delay. If your property is burglarized, your property insurance agrees to repay you or enable the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is sometimes a time-consuming affair – and time spent waiting in some cases increases the damage to the victim – insurance firms in many cases decide to pay up front and figure out the blame after the fact. They then need a path to recoup the costs if, when all is said and done, they weren't responsible for the expense.
Can You Give an Example?
You arrive at the Instacare with a sliced-open finger. You give the receptionist your medical insurance card and he writes down your coverage details. You get stitches and your insurance company gets an invoice for the expenses. But on the following day, when you get to work – where the accident occurred – your boss hands you workers compensation paperwork to turn in. Your company's workers comp policy is in fact responsible for the payout, not your medical insurance policy. The latter has an interest in recovering its money in some way.
How Does Subrogation Work?
This is where subrogation comes in. It is the way that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. Some companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Ordinarily, only you can sue for damages to your person or property. But under subrogation law, your insurance company is given some of your rights in exchange for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Individuals?
For starters, if you have a deductible, your insurance company wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to recover its losses by upping your premiums. On the other hand, if it knows which cases it is owed and goes after them efficiently, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent culpable), you'll typically get $500 back, based on the laws in most states.
Moreover, if the total loss of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as car injury lawyer Duluth ga, pursue subrogation and succeeds, it will recover your expenses as well as its own.
All insurance companies are not created equal. When comparing, it's worth measuring the records of competing agencies to determine if they pursue valid subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their accountholders advised as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, on the other hand, an insurance firm has a reputation of honoring claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.