Subrogation is a concept that's understood in legal and insurance circles but often not by the people who hire them. Even if you've never heard the word before, it would be in your benefit to understand the nuances of the process. The more knowledgeable you are about it, the more likely it is that relevant proceedings will work out favorably.
An insurance policy you have is a commitment that, if something bad occurs, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and the judicial system, when necessary) determine who was to blame and that party's insurance covers the damages.
But since figuring out who is financially accountable for services or repairs is often a heavily involved affair – and time spent waiting often 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 mechanism to regain the costs if, in the end, they weren't actually in charge of the expense.
You head to the emergency room with a deeply cut finger. You hand the nurse your medical insurance card and she records your plan information. You get stitched up and your insurer gets a bill for the medical care. But the next morning, when you clock in at work – where the injury occurred – your boss hands you workers compensation forms to fill out. Your workers comp policy is actually responsible for the costs, not your medical insurance. It has a vested interest in getting that money back in some way.
How Does Subrogation Work?
This is where subrogation comes in. It is the way 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 done to your self or property. But under subrogation law, your insurer is given some of your rights in exchange for having taken care of 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 a start, if your insurance policy stipulated a deductible, your insurer wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to recover its losses by increasing your premiums. 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 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 culpable), you'll typically get $500 back, depending on the laws in your state.
Moreover, if the total price 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 Alpharetta, pursue subrogation and wins, it will recover your costs as well as its own.
All insurance companies are not created equal. When shopping around, it's worth looking at the records of competing firms to find out if they pursue valid subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their policyholders posted as the case proceeds; 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 paying out claims that aren't its responsibility and then covering its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.