Subrogation is an idea that's well-known among insurance and legal companies but rarely by the customers who hire them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your self-interest to know the steps of the process. The more you know, the more likely it is that an insurance lawsuit will work out favorably.
Any insurance policy you hold is an assurance that, if something bad occurs, the company that covers the policy will make good in one way or another in a timely manner. If your vehicle is rear-ended, insurance adjusters (and the courts, when necessary) decide who was to blame and that person's insurance pays out.
But since figuring out who is financially accountable for services or repairs is sometimes a time-consuming affair – and time spent waiting sometimes adds to the damage to the victim – insurance firms usually decide to pay up front and assign blame after the fact. They then need a method to regain the costs if, when there is time to look at all the facts, they weren't responsible for the payout.
For Example
You head to the emergency room with a gouged finger. You give the receptionist your health insurance card and he takes down your policy details. You get stitched up and your insurer is billed for the medical care. But on the following morning, when you arrive at your place of employment – where the accident happened – you are given workers compensation paperwork to turn in. Your employer's workers comp policy is in fact responsible for the bill, not your health insurance company. It has a vested interest in getting that money back 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 insurance firms 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 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.
How Does This Affect the Insured?
For starters, if you have a deductible, it wasn't just your insurer who 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 insurance company is timid on any subrogation case it might not win, it might opt to recoup its losses by raising your premiums. On the other hand, if it knows which cases it is owed and pursues those cases aggressively, it is acting both in its own interests and in yours. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get $500 back, depending on your state laws.
Additionally, if the total price of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as Car Accident Lawyer in Marietta, Ga, pursue subrogation and wins, it will recover your expenses as well as its own.
All insurers are not the same. When shopping around, it's worth looking up the records of competing companies to evaluate if they pursue legitimate subrogation claims; if they resolve those claims without delay; if they keep their customers updated as the case continues; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, on the other hand, an insurer has a reputation of paying out claims that aren't its responsibility and then covering its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.