Subrogation is an idea that's understood among insurance and legal professionals but sometimes not by the people who hire them. Even if you've never heard the word before, it would be in your self-interest to know the steps of how it works. The more information you have about it, the better decisions you can make with regard to your insurance company.
Every insurance policy you have is a promise that, if something bad happens to you, the insurer of the policy will make good in one way or another without unreasonable delay. If your vehicle is hit, insurance adjusters (and the courts, when necessary) determine who was to blame and that person's insurance pays out.
But since ascertaining who is financially accountable for services or repairs is regularly a time-consuming affair – and delay often compounds the damage to the policyholder – insurance firms usually decide to pay up front and assign blame after the fact. They then need a mechanism to get back the costs if, when all is said and done, they weren't in charge of the payout.
Let's Look at an Example
You go to the doctor's office with a deeply cut finger. You give the nurse your medical insurance card and he writes down your coverage information. You get stitches and your insurance company is billed for the medical care. But the next morning, when you clock in at work – where the accident happened – your boss hands you workers compensation paperwork to fill out. Your company's workers comp policy is in fact responsible for the hospital trip, not your medical insurance policy. The latter has a right to recover its costs somehow.
How Subrogation Works
This is where subrogation comes in. It is the method 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 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 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 lost some money too – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to recover its costs 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 is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half responsible), you'll typically get $500 back, depending on the laws in your state.
Moreover, if the total loss 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 Auto accident attorney Powder Springs, Ga, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurance companies are not the same. When comparing, it's worth scrutinizing the records of competing companies to evaluate if they pursue valid subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their clients informed as the case continues; 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 agency has a record of honoring claims that aren't its responsibility and then safeguarding its income by raising your premiums, you should keep looking.