Subrogation is an idea that's understood among insurance and legal companies but rarely by the customers who employ them. Rather than leave it to the professionals, it is to your advantage to comprehend the steps of how it works. The more knowledgeable you are about it, the better decisions you can make about your insurance policy.
An insurance policy you hold is a commitment that, if something bad happens to you, the firm on the other end of the policy will make restitutions in a timely manner. If your vehicle is rear-ended, insurance adjusters (and the judicial system, when necessary) determine who was at fault and that person's insurance pays out.
But since figuring out who is financially accountable for services or repairs is regularly a time-consuming affair – and delay sometimes adds to the damage to the victim – insurance companies in many cases opt to pay up front and assign blame after the fact. They then need a method to regain the costs if, ultimately, they weren't actually in charge of the payout.
Can You Give an Example?
You go to the Instacare with a gouged finger. You give the nurse your health insurance card and he takes down your coverage details. You get stitched up and your insurer is billed for the services. But on the following morning, when you get to your workplace – where the injury happened – you are given workers compensation forms to file. Your workers comp policy is actually responsible for the bill, not your health insurance. The latter has a right to recover its costs somehow.
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 companies 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 to your self or property. But under subrogation law, your insurer is extended 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 Policyholders?
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 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 get back its losses by increasing your premiums. On the other hand, if it knows which cases it is owed and goes after 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 $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent culpable), you'll typically get half your deductible back, depending on your state laws.
Furthermore, 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 auto accident smyrna ga, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance agencies are not created equal. When comparing, it's worth researching the reputations of competing companies to evaluate if they pursue valid subrogation claims; if they resolve those claims fast; if they keep their policyholders apprised as the case goes on; 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 insurance agency has a reputation of paying out claims that aren't its responsibility and then covering its profitability by raising your premiums, you'll feel the sting later.