Subrogation is a term that's well-known among legal and insurance professionals but sometimes not by the people who employ them. Even if you've never heard the word before, it would be in your self-interest to understand the steps of the process. The more you know about it, the better decisions you can make about your insurance company.
An insurance policy you own is a promise that, if something bad occurs, the firm that covers the policy will make good in a timely manner. If you get hurt while working, for example, your employer's workers compensation pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially accountable for services or repairs is usually a heavily involved affair – and time spent waiting sometimes increases the damage to the policyholder – insurance companies often opt to pay up front and assign blame later. They then need a method to recoup the costs if, ultimately, they weren't responsible for the payout.
You head to the hospital with a deeply cut finger. You hand the nurse your medical insurance card and he records your coverage details. You get taken care of and your insurer is billed for the medical care. But on the following morning, when you get to work – where the accident happened – your boss hands you workers compensation forms to file. Your employer's workers comp policy is actually responsible for the bill, not your medical insurance company. The latter has a right to recover its costs somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the process 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 to your person or property. But under subrogation law, your insurer is considered to have 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.
Why Do I Need to Know This?
For one thing, if you have a deductible, your insurer 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 – to be precise, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its losses by increasing your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and pursues them aggressively, it is acting both in its own interests and in yours. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent to blame), you'll typically get $500 back, depending on the laws in your state.
In addition, if the total price 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 work injury Columbus, ga, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurance companies are not created equal. When shopping around, it's worth weighing the reputations of competing firms to determine whether they pursue winnable subrogation claims; if they resolve those claims quickly; if they keep their policyholders updated as the case goes on; and if they then process successfully won reimbursements right away so that you can get your losses back and move on with your life. If, on the other hand, an insurance agency has a reputation of honoring claims that aren't its responsibility and then protecting its profit margin by raising your premiums, you'll feel the sting later.