Subrogation is a concept that's well-known in legal and insurance circles but often not by the policyholders they represent. Even if you've never heard the word before, it is in your self-interest to understand an overview of how it works. The more information you have about it, the better decisions you can make about your insurance company.
Every insurance policy you have is an assurance that, if something bad occurs, the business that insures the policy will make good without unreasonable delay. If you get injured on the job, your company's workers compensation insurance pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially accountable for services or repairs is usually a heavily involved affair – and delay often increases the damage to the policyholder – insurance companies in many cases decide to pay up front and assign blame afterward. They then need a path to recoup the costs if, when all is said and done, they weren't in charge of the payout.
Let's Look at an Example
You head to the emergency room with a deeply cut finger. You give the nurse your medical insurance card and she takes down your policy details. You get stitched up and your insurer is billed for the services. But the next day, when you arrive at work – where the accident occurred – your boss hands you workers compensation paperwork to fill out. Your workers comp policy is actually responsible for the hospital visit, not your medical insurance policy. It has a vested interest in getting that money back in some way.
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. Under ordinary circumstances, only you can sue for damages done to your self or property. But under subrogation law, your insurer is considered to have 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 Does This Matter to Me?
For one thing, if you have a deductible, it wasn't just your insurer that 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 recoup its costs by boosting your premiums. On the other hand, if it knows which cases it is owed and goes after those cases efficiently, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent accountable), you'll typically get $500 back, depending on the laws in your state.
Furthermore, if the total price 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 workmans comp lawyer Marietta GA, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurers are not the same. When comparing, it's worth scrutinizing the reputations of competing companies to find out whether they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their customers advised as the case proceeds; 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 insurance company has a reputation of honoring claims that aren't its responsibility and then covering its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.