Subrogation is an idea that's well-known among insurance and legal professionals but rarely by the people they represent. Even if you've never heard the word before, it would be in your benefit to know the nuances of how it works. The more you know, the better decisions you can make with regard to your insurance company.
Every insurance policy you hold is a commitment that, if something bad occurs, the insurer of the policy will make good without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and police, when necessary) determine who was at fault and that person's insurance pays out.
But since ascertaining who is financially accountable for services or repairs is usually a heavily involved affair – and delay in some cases adds to the damage to the policyholder – insurance companies usually decide to pay up front and figure out the blame afterward. They then need a mechanism to recover the costs if, when there is time to look at all the facts, they weren't actually in charge of the payout.
Let's Look at an Example
You rush into the emergency room with a gouged finger. You give the receptionist your medical insurance card and she writes down your coverage information. You get stitches and your insurer gets a bill for the expenses. But on the following morning, when you get to work – where the injury happened – your boss hands you workers compensation paperwork to fill out. Your company's workers comp policy is in fact responsible for the payout, not your medical insurance policy. The latter has an interest in recovering its costs in some way.
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim payment 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. Usually, only you can sue for damages done 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 Me?
For a start, 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 have a stake in the outcome as well – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to get back its losses by upping your premiums. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is doing you a favor as well as itself. If all ten grand 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, depending on your state laws.
In addition, if the total expense 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 auto accident lawyer SMYRNA, Ga, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurers are not created equal. When shopping around, it's worth looking at the records of competing agencies to evaluate whether they pursue valid subrogation claims; if they do so without dragging their feet; if they keep their accountholders posted as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your losses 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 covering its income by raising your premiums, even attractive rates won't outweigh the eventual headache.