Subrogation is an idea that's well-known among insurance and legal professionals but rarely by the people they represent. Even if you've never heard the word before, it is to your advantage to understand the nuances of the process. The more knowledgeable you are about it, the more likely relevant proceedings will work out favorably.
Every insurance policy you hold is a promise that, if something bad occurs, the company that covers the policy will make restitutions without unreasonable delay. If you get injured while you're on the clock, your employer's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially accountable for services or repairs is regularly a tedious, lengthy affair – and delay sometimes compounds the damage to the policyholder – insurance firms usually decide to pay up front and figure out the blame afterward. They then need a path to recoup the costs if, ultimately, they weren't responsible for the expense.
Can You Give an Example?
You rush into the Instacare with a gouged finger. You hand the nurse your medical insurance card and he records your plan details. You get stitches and your insurance company gets an invoice for the expenses. But on the following day, when you clock in at your workplace – where the accident occurred – you are given workers compensation paperwork to turn in. Your employer's workers comp policy is actually responsible for the costs, not your medical insurance company. It has a vested interest in getting that money back in some way.
How Does Subrogation Work?
This is where subrogation comes in. It is the method 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. Under ordinary circumstances, only you can sue for damages to your self or property. But under subrogation law, your insurance company is given some of your rights for making good on the damages. It can go after the money that was originally due to you, because it has covered the amount already.
How Does This Affect Policyholders?
For a start, if you have a deductible, your insurance company wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to the tune of $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to get back its losses by upping your premiums and call it a day. 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 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, depending on your state laws.
In addition, if the total cost 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 accident lawyer Powder Springs, Ga, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurance companies are not the same. When shopping around, it's worth looking at the records of competing companies to evaluate whether they pursue winnable subrogation claims; if they do so in a reasonable amount of time; if they keep their policyholders apprised as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your money back and move on with your life. If, on the other hand, an insurer has a record of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, even attractive rates won't outweigh the eventual headache.