Subrogation and How It Affects You

Subrogation is an idea that's well-known in legal and insurance circles but often not by the policyholders who employ them. Rather than leave it to the professionals, it is in your benefit to understand the nuances of the process. The more knowledgeable you are, the more likely an insurance lawsuit will work out favorably.

Every insurance policy you have is an assurance that, if something bad happens to you, the insurer of the policy will make good in a timely manner. If your property is broken into, for example, your property insurance steps in to pay you or facilitate the repairs, subject to state property damage laws.

But since figuring out who is financially accountable for services or repairs is sometimes a tedious, lengthy affair – and delay often adds to the damage to the policyholder – insurance companies usually decide to pay up front and assign blame after the fact. They then need a method to get back the costs if, ultimately, they weren't actually responsible for the expense.

Can You Give an Example?

You rush into the hospital with a gouged finger. You give the receptionist your medical insurance card and she writes down your policy details. You get stitches and your insurer gets a bill for the services. But the next morning, when you clock in at your place of employment – where the injury happened – you are given workers compensation forms to file. Your employer's workers comp policy is actually responsible for the expenses, not your medical insurance company. It has a vested interest in getting that money back somehow.

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 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 person or property. But under subrogation law, your insurer is considered to have 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.

How Does This Affect the Insured?

For one thing, if your insurance policy stipulated a deductible, your insurer wasn't the only one who 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 get back its costs by increasing your premiums. On the other hand, if it knows which cases it is owed and pursues those cases aggressively, it is acting both in its own interests and in yours. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent to blame), you'll typically get half your deductible back, based on the laws in most states.

In addition, 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 workmans comp attorney Alpharetta, pursue subrogation and wins, it will recover your losses in addition to its own.

All insurance agencies are not the same. When shopping around, it's worth contrasting the records of competing companies to find out if they pursue valid subrogation claims; if they do so without delay; if they keep their customers apprised as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your money back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, you'll feel the sting later.