Subrogation is an idea that's understood among insurance and legal companies but sometimes not by the people who hire them. Even if you've never heard the word before, it would be in your self-interest to know the nuances of how it works. The more information you have about it, the better decisions you can make with regard to your insurance policy.
An insurance policy you own is a promise that, if something bad happens to you, the insurer of the policy will make good in one way or another in a timely manner. If your vehicle is hit, insurance adjusters (and the courts, when necessary) determine who was to blame and that person's insurance pays out.
But since figuring out who is financially accountable for services or repairs is typically a time-consuming affair – and delay sometimes increases the damage to the policyholder – insurance companies in many cases decide to pay up front and assign blame later. They then need a way to get back the costs if, when all the facts are laid out, they weren't in charge of the expense.
For Example
You arrive at the Instacare with a gouged finger. You give the receptionist your medical insurance card and she writes down your coverage information. You get stitched up and your insurer is billed for the expenses. But the next day, when you clock in at work – where the accident happened – your boss hands you workers compensation paperwork to file. Your workers comp policy is in fact responsible for the bill, not your medical insurance policy. The latter has a right to recover its money somehow.
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim payment after it has paid for something that should have been paid by some other entity. 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. Usually, only you can sue for damages done to your self or property. But under subrogation law, your insurer is given some of your rights in exchange for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Me?
For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurer 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 insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recoup its expenses by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases efficiently, 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 one-half accountable), you'll typically get $500 back, depending on the laws in your state.
In addition, if the total cost of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as Auto accident attorney Norcross, Ga, successfully press a subrogation case, it will recover your losses as well as its own.
All insurers are not the same. When comparing, it's worth comparing the reputations of competing firms to evaluate whether they pursue winnable subrogation claims; if they resolve those claims fast; if they keep their accountholders updated as the case continues; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, on the other hand, an insurer has a reputation of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, you'll feel the sting later.