Subrogation is a concept that's well-known among legal and insurance firms but rarely by the people who employ them. Rather than leave it to the professionals, it is to your advantage to comprehend the nuances of how it works. The more knowledgeable you are, the better decisions you can make with regard to your insurance company.
An insurance policy you have is a promise that, if something bad happens to you, the business that insures the policy will make good without unreasonable delay. If your house is broken into, your property insurance agrees to remunerate you or enable the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is sometimes a tedious, lengthy affair – and delay often increases the damage to the policyholder – insurance firms usually decide to pay up front and figure out the blame afterward. They then need a mechanism to recoup the costs if, ultimately, they weren't responsible for the expense.
Can You Give an Example?
You go to the Instacare with a sliced-open finger. You give the nurse your health insurance card and he writes down your policy details. You get taken care of and your insurer gets an invoice for the medical care. But the next afternoon, when you arrive at your workplace – where the injury happened – your boss hands you workers compensation forms to turn in. Your company's workers comp policy is in fact responsible for the bill, not your health insurance. The latter has an interest in recovering its money somehow.
How Subrogation Works
This is where subrogation comes in. It is the method 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. Under ordinary circumstances, only you can sue for damages to your self or property. But under subrogation law, your insurer is considered to have some of your rights for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Does This Matter to Me?
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 – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recoup its costs by ballooning your premiums. On the other hand, if it knows which cases it is owed and goes after them efficiently, it is acting both in its own interests and in yours. 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 50 percent culpable), you'll typically get $500 back, based on the laws in most states.
Furthermore, if the total expense 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 workers comp lawyer Dunwoody, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurance agencies are not the same. When comparing, it's worth examining the records of competing agencies to find out if they pursue legitimate subrogation claims; if they resolve those claims with some expediency; if they keep their accountholders apprised as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then protecting its profit margin by raising your premiums, you'll feel the sting later.