Subrogation is an idea that's well-known among insurance and legal professionals but often not by the policyholders who hire them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is to your advantage to comprehend an overview of the process. The more knowledgeable you are, the better decisions you can make about your insurance policy.
An insurance policy you have is a promise that, if something bad occurs, the company on the other end of the policy will make restitutions in one way or another without unreasonable delay. If you get hurt while you're on the clock, your company's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially responsible for services or repairs is regularly a tedious, lengthy affair – and delay in some cases increases the damage to the victim – insurance firms in many cases opt to pay up front and figure out the blame later. They then need a way to regain the costs if, in the end, they weren't responsible for the expense.
You rush into the doctor's office with a deeply cut finger. You hand the receptionist your health insurance card and he records your policy details. You get stitches and your insurer gets a bill for the tab. But the next day, when you get to your workplace – where the accident occurred – your boss hands you workers compensation forms to file. Your company's workers comp policy is in fact responsible for the payout, 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 process that an insurance company uses to claim reimbursement after it has paid for something that should have been paid by some other entity. Some companies 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 extended some of your rights in exchange for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect the Insured?
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 – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recover 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 doing you a favor as well as itself. 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 responsible), you'll typically get half your deductible back, depending on the laws in your state.
Moreover, if the total expense 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 work injury Columbus, ga, pursue subrogation and succeeds, it will recover your expenses as well as its own.
All insurance companies are not created equal. When comparing, it's worth weighing the reputations of competing agencies to determine whether they pursue valid subrogation claims; if they do so without delay; if they keep their policyholders updated as the case continues; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, on the other hand, an insurance agency has a record of honoring claims that aren't its responsibility and then covering its income by raising your premiums, you'll feel the sting later.