The Things Every Insurance Policy holder Ought to Know About Subrogation

Subrogation is a concept that's understood in legal and insurance circles but often not by the people they represent. Even if you've never heard the word before, it would be in your benefit to understand the steps of how it works. The more knowledgeable you are, the better decisions you can make about your insurance company.

An insurance policy you hold is an assurance that, if something bad occurs, the business that covers the policy will make good in a timely manner. If you get hurt at work, your company's workers compensation insurance picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.

But since figuring out who is financially accountable for services or repairs is regularly a confusing affair – and time spent waiting often adds to the damage to the victim – insurance firms often opt to pay up front and figure out the blame after the fact. They then need a means to recover the costs if, ultimately, they weren't actually in charge of the payout.

Can You Give an Example?

You go to the doctor's office with a gouged finger. You hand the receptionist your health insurance card and she takes down your policy information. You get taken care of and your insurance company gets a bill for the expenses. But the next day, when you get to your workplace – where the accident occurred – you are given workers compensation paperwork to fill out. Your employer's workers comp policy is actually responsible for the expenses, not your health insurance policy. 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 method that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. 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 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 originally due to you, because it has covered the amount already.

How Does This Affect Individuals?

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 – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to get back its costs by ballooning your premiums. On the other hand, if it knows which cases it is owed and goes after those cases enthusiastically, it is doing you a favor as well as itself. If all $10,000 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 to blame), you'll typically get $500 back, based on the laws in most states.

Moreover, if the total loss 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 accident injury lawyers decatur, ga, successfully press a subrogation case, it will recover your expenses as well as its own.

All insurance agencies are not the same. When shopping around, it's worth contrasting the records of competing companies to evaluate if they pursue winnable subrogation claims; if they do so in a reasonable amount of time; if they keep their accountholders informed as the case continues; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, on the other hand, an insurer has a reputation of honoring claims that aren't its responsibility and then protecting its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.