Subrogation is a term that's well-known among legal and insurance firms but often not by the people who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is to your advantage to comprehend an overview of how it works. The more information you have about it, the better decisions you can make with regard to your insurance policy.
Every insurance policy you hold is a promise that, if something bad occurs, the company that covers the policy will make restitutions in a timely manner. If your real estate suffers fire damage, your property insurance agrees to pay you or enable the repairs, subject to state property damage laws.
But since ascertaining who is financially responsible for services or repairs is regularly a time-consuming affair – and delay often compounds the damage to the victim – insurance companies in many cases opt to pay up front and figure out the blame later. They then need a way to regain the costs if, in the end, they weren't in charge of the payout.
Let's Look at an Example
You rush into the emergency room with a deeply cut finger. You give the receptionist your health insurance card and he takes down your plan details. You get taken care of and your insurer is billed for the medical care. But the next afternoon, when you clock in at your workplace – where the injury occurred – you are given workers compensation paperwork to fill out. Your company's workers comp policy is actually responsible for the payout, not your health insurance company. It has a vested interest in getting that money back in some way.
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. Ordinarily, only you can sue for damages to your self or property. But under subrogation law, your insurer is extended some of your rights in exchange 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 Should I Care?
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 – namely, $1,000. If your insurance company 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 efficiently, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full $1,000 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, depending on your state laws.
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 spendy. If your insurance company or its property damage lawyers, such as workers compensation Milton, ga, pursue subrogation and succeeds, it will recover your costs as well as its own.
All insurers are not the same. When shopping around, it's worth measuring the reputations of competing firms to determine whether they pursue valid subrogation claims; if they resolve those claims without dragging their feet; if they keep their accountholders posted as the case proceeds; 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, instead, an insurance company has a reputation of honoring claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you'll feel the sting later.