Subrogation is a term that's well-known in insurance and legal circles but sometimes not by the policyholders they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is to your advantage to know an overview of the process. The more knowledgeable you are, the more likely it is that relevant proceedings will work out favorably.
Every insurance policy you own is a commitment that, if something bad occurs, the business that covers the policy will make restitutions without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and the judicial system, when necessary) decide who was to blame and that person's insurance pays out.
But since determining who is financially responsible for services or repairs is often a heavily involved affair – and time spent waiting sometimes increases the damage to the policyholder – insurance firms in many cases decide to pay up front and figure out the blame afterward. They then need a method to regain the costs if, when all is said and done, they weren't actually in charge of the payout.
Let's Look at an Example
You go to the emergency room with a sliced-open finger. You hand the receptionist your medical insurance card and he takes down your plan details. You get taken care of and your insurer is billed for the services. But on the following day, when you get to your place of employment – where the injury occurred – you are given workers compensation forms to turn in. Your company's workers comp policy is in fact responsible for the invoice, not your medical insurance company. It has a vested interest in getting that money back somehow.
How Subrogation Works
This is where subrogation comes in. It is the process that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. Some insurance firms 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 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.
How Does This Affect Me?
For starters, if your insurance policy stipulated a deductible, your insurer 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 – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to recoup 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 those cases aggressively, it is acting both in its own interests and in yours. If all of the money 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 half your deductible back, based on the laws in most states.
Moreover, if the total cost of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as car accident attorney Austell GA, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurance agencies are not created equal. When comparing, it's worth researching the reputations of competing firms to determine whether they pursue valid subrogation claims; if they do so without delay; if they keep their clients apprised as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your deductible 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 protecting its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.