Subrogation is a concept that's well-known among insurance and legal professionals but often not by the people they represent. Even if it sounds complicated, it would be to your advantage to know the nuances of how it works. The more knowledgeable you are, the better decisions you can make with regard to your insurance policy.
Any insurance policy you have is a commitment that, if something bad occurs, the firm on the other end of the policy will make restitutions in a timely fashion. If your house is burglarized, your property insurance agrees to pay you or enable the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is usually a time-consuming affair – and time spent waiting often adds to the damage to the policyholder – insurance firms often decide to pay up front and figure out the blame after the fact. They then need a means to recover the costs if, when there is time to look at all the facts, they weren't in charge of the expense.
For Example
You go to the Instacare with a deeply cut finger. You hand the receptionist your health insurance card and he records your plan details. You get stitches and your insurance company is billed for the medical care. But the next afternoon, when you get to your place of employment – where the accident happened – you are given workers compensation paperwork to turn in. Your workers comp policy is actually responsible for the bill, not your health insurance policy. It has a vested interest in getting that money back somehow.
How Subrogation Works
This is where subrogation comes in. It is the way that an insurance company uses to claim payment after it has paid for something that should have been paid by some other entity. Some companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is extended some of your rights for having taken care of the damages. It can go after the money that was originally due to you, because it has covered the amount already.
Why Do I Need to Know This?
For starters, if you have a deductible, it wasn't just your insurance company who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to be precise, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to get back its costs by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them aggressively, it is acting both in its own interests and in yours. 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 one-half culpable), you'll typically get $500 back, based on the laws in most states.
Additionally, if the total loss of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as workers compensation Lithia Springs GA, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurance agencies are not created equal. When shopping around, it's worth measuring the reputations of competing firms to find out whether they pursue winnable subrogation claims; if they resolve those claims without dragging their feet; if they keep their customers posted as the case continues; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, on the other hand, an insurance firm has a record of honoring claims that aren't its responsibility and then protecting its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.