Subrogation and How It Affects You
Subrogation is a term that's understood in legal and insurance circles but often 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 understand the steps of how it works. The more you know, the more likely it is that relevant proceedings will work out favorably.
An insurance policy you have is a commitment that, if something bad happens to you, the insurer of the policy will make good without unreasonable delay. If your vehicle is hit, insurance adjusters (and the courts, when necessary) decide who was at fault and that person's insurance pays out.
But since ascertaining who is financially responsible for services or repairs is often a time-consuming affair – and delay in some cases compounds the damage to the victim – insurance companies usually decide to pay up front and figure out the blame afterward. They then need a mechanism to recoup the costs if, when all the facts are laid out, they weren't actually responsible for the expense.
For Example
You arrive at the emergency room with a deeply cut finger. You hand the receptionist your health insurance card and she takes down your coverage information. You get stitches and your insurer is billed for the services. But the next afternoon, when you clock in at work – where the injury occurred – you are given workers compensation forms to turn in. Your workers comp policy is actually responsible for the costs, not your health insurance. It has a vested interest in getting that money back 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 companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Ordinarily, only you can sue for damages done to your person or property. But under subrogation law, your insurer is considered to have some of your rights for having taken care of 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 the Insured?
For one thing, if your insurance policy stipulated 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 – namely, $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to get back its losses by upping your premiums. On the other hand, if it has a proficient legal team and goes after those cases enthusiastically, it is acting both in its own interests and in yours. If all $10,000 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 accountable), you'll typically get $500 back, depending on the laws in your state.
Additionally, if the total expense 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 auto accident attorneys Columbus GA, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurers are not created equal. When comparing, it's worth scrutinizing the records of competing firms to evaluate if they pursue valid subrogation claims; if they resolve those claims without dragging their feet; if they keep their customers informed as the case proceeds; and if they then process successfully won reimbursements quickly 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 paying out claims that aren't its responsibility and then covering its bottom line by raising your premiums, you should keep looking.