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.
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Subrogation is a concept that's understood in legal and insurance circles but rarely by the customers they represent. Even if it sounds complicated, it is in your benefit to comprehend the steps of how it works. The more information you have, the better decisions you can make with regard to your insurance policy.
Any insurance policy you hold is a commitment that, if something bad occurs, the business that covers the policy will make good in a timely manner. If a hailstorm damages your home, for instance, your property insurance steps in to pay you or enable the repairs, subject to state property damage laws.
But since figuring out who is financially accountable for services or repairs is regularly a confusing affair – and delay sometimes compounds the damage to the policyholder – insurance firms in many cases decide to pay up front and figure out the blame later. They then need a method to regain the costs if, ultimately, they weren't responsible for the expense.
You arrive at the emergency room with a sliced-open finger. You give the receptionist your health insurance card and he writes down your coverage details. You get stitches and your insurer gets a bill for the medical care. But on the following afternoon, when you clock in at your place of employment – where the accident happened – your boss hands you workers compensation paperwork to file. Your employer's workers comp policy is actually responsible for the invoice, 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 process that an insurance company uses to claim reimbursement 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 done to your person or property. But under subrogation law, your insurer is extended some of your rights for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Do I Need to Know This?
For one thing, 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 lost some money too – to be precise, $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to get back its losses by raising your premiums. On the other hand, if it has a proficient legal team and pursues those cases enthusiastically, it is doing you a favor as well as itself. If all of the money 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 at fault), you'll typically get half your deductible back, based on the laws in most states.
In addition, 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 child custody lawyer boulder city Nv, pursue subrogation and wins, it will recover your expenses as well as its own.
All insurers are not the same. When comparing, it's worth researching the records of competing companies to determine whether they pursue legitimate subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their accountholders advised 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 insurance company has a reputation of honoring claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you should keep looking.