Subrogation is a concept that's understood in insurance and legal circles but sometimes not by the people they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be to your advantage to know the steps of how it works. The more information you have, the better decisions you can make with regard to your insurance policy.
An insurance policy you have is a commitment that, if something bad happens to you, the business that insures the policy will make restitutions in one way or another in a timely fashion. If you get injured on the job, 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 ascertaining who is financially accountable for services or repairs is sometimes a confusing affair – and time spent waiting in some cases increases the damage to the victim – insurance companies in many cases decide to pay up front and figure out the blame afterward. They then need a method to recoup the costs if, when all is said and done, they weren't in charge of the expense.
For Example
Your bedroom catches fire and causes $10,000 in home damages. Happily, you have property insurance and it pays out your claim in full. However, in its investigation it finds out that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him accountable for the damages. The house has already been fixed up in the name of expediency, but your insurance agency is out $10,000. What does the agency do next?
How Does Subrogation Work?
This is where subrogation comes in. It is the process that an insurance company uses to claim payment 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. Normally, only you can sue for damages done to your person 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.
Why Should I Care?
For a start, if your insurance policy stipulated 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 – to the tune of $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to get back its expenses by upping your premiums and call it a day. On the other hand, if it has a competent legal team and pursues those cases enthusiastically, it is acting both in its own interests and in yours. If all of the money 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 half your deductible back, depending on your state laws.
Furthermore, if the total loss of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as workers compensation Columbus, ga, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurance agencies are not the same. When comparing, it's worth weighing the reputations of competing firms to find out if they pursue legitimate subrogation claims; if they resolve those claims without dragging their feet; if they keep their customers advised 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 insurance company has a reputation of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you'll feel the sting later.