Subrogation is a concept that's understood in insurance and legal circles but rarely by the people they represent. Even if it sounds complicated, it is to your advantage to know the nuances of how it works. The more knowledgeable you are, the more likely an insurance lawsuit will work out in your favor.
Every insurance policy you own is an assurance that, if something bad happens to you, the firm that covers the policy will make good without unreasonable delay. If you get an injury while working, for example, your employer's workers compensation agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially responsible for services or repairs is often a confusing affair – and delay often compounds the damage to the policyholder – insurance firms usually decide to pay up front and assign blame later. They then need a means to get back the costs if, when all the facts are laid out, they weren't in charge of the expense.
You rush into the doctor's office with a gouged finger. You give the receptionist your medical insurance card and she records your policy information. You get stitches and your insurance company is billed for the medical care. But on the following afternoon, when you get to your workplace – where the injury happened – you are given workers compensation forms to fill out. Your employer's workers comp policy is in fact responsible for the payout, not your medical insurance. 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 way that an insurance company uses to claim payment 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 self or property. But under subrogation law, your insurance company is given 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 Individuals?
For a start, if your insurance policy stipulated a deductible, it wasn't just your insurance company 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 insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its losses by boosting your premiums. On the other hand, if it knows which cases it is owed and goes after those cases aggressively, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half responsible), you'll typically get half your deductible back, depending on the laws in your state.
Furthermore, if the total cost 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 attorney Dunwoody, pursue subrogation and succeeds, it will recover your costs in addition to its own.
All insurance agencies are not the same. When shopping around, it's worth contrasting the reputations of competing agencies to find out whether they pursue winnable subrogation claims; if they resolve those claims quickly; if they keep their policyholders advised as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your funding 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 profit margin by raising your premiums, you should keep looking.