Subrogation is a concept that's well-known among legal and insurance companies but rarely by the customers they represent. Even if you've never heard the word before, it would be to your advantage to comprehend an overview of the process. The more information you have, the more likely an insurance lawsuit will work out in your favor.
An insurance policy you own is an assurance that, if something bad happens to you, the insurer of the policy will make restitutions without unreasonable delay. If your property burns down, your property insurance steps in to remunerate you or pay for the repairs, subject to state property damage laws.
But since figuring out who is financially accountable for services or repairs is regularly a tedious, lengthy affair – and delay in some cases compounds the damage to the policyholder – insurance companies often opt to pay up front and assign blame later. They then need a mechanism to recover the costs if, in the end, they weren't responsible for the expense.
Let's Look at an Example
You go to the hospital with a deeply cut finger. You give the nurse your health insurance card and he records your plan information. You get stitched up and your insurance company is billed for the tab. But on the following afternoon, when you clock in at your workplace – where the injury 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 company. The latter has a right to recover its money somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the way 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. Usually, only you can sue for damages done to your person 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.
Why Do I Need to Know This?
For one thing, if your insurance policy stipulated 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 lost some money too – to be precise, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its losses by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is acting both in its own interests and in yours. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half at fault), you'll typically get $500 back, based on the laws in most states.
Moreover, if the total expense of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as workmen's compensation Columbus, ga, pursue subrogation and wins, 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 determine if they pursue valid subrogation claims; if they do so with some expediency; if they keep their accountholders updated as the case goes on; 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 protecting its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.