Subrogation is a concept that's well-known in legal and insurance circles but often not by the customers who hire them. Even if you've never heard the word before, it would be to your advantage to understand the nuances of the process. The more knowledgeable you are, the more likely an insurance lawsuit will work out favorably.
Every insurance policy you own is a promise that, if something bad occurs, the insurer 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 to blame and that party's insurance pays out.
But since determining who is financially responsible for services or repairs is sometimes a tedious, lengthy affair – and delay in some cases compounds the damage to the victim – insurance firms in many cases opt to pay up front and figure out the blame afterward. They then need a method to get back the costs if, ultimately, they weren't actually responsible for the expense.
For Example
You head to the hospital with a sliced-open finger. You hand the receptionist your health insurance card and she records your policy details. You get stitched up and your insurer gets a bill for the medical care. But the next afternoon, when you get to your place of employment – where the injury occurred – you are given workers compensation paperwork to fill out. Your company's workers comp policy is actually responsible for the costs, not your health insurance policy. The latter has a right to recover its money somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the process 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. Normally, only you can sue for damages to your person or property. But under subrogation law, your insurer is considered to have some of your rights in exchange for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Should I Care?
For starters, if you have a deductible, your insurer wasn't the only one that 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 unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its losses by boosting your premiums. On the other hand, if it has a competent legal team and pursues those cases efficiently, it is acting both in its own interests and in yours. If all is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found one-half to blame), you'll typically get $500 back, depending on the laws in your state.
Moreover, if the total price of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as personal injury lawyer Mableton GA, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurers are not the same. When shopping around, it's worth scrutinizing the records of competing firms to determine if they pursue valid subrogation claims; if they do so quickly; if they keep their accountholders updated 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, instead, an insurer has a record of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, you'll feel the sting later.