Subrogation is a term that's understood in legal and insurance circles but rarely by the policyholders who hire them. Rather than leave it to the professionals, it is in your self-interest to comprehend the nuances of the process. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance policy.
Every insurance policy you hold is a promise that, if something bad happens to you, the firm on the other end of the policy will make restitutions without unreasonable delay. If a windstorm damages your property, your property insurance agrees to compensate you or facilitate the repairs, subject to state property damage laws.
But since figuring out who is financially accountable for services or repairs is regularly a confusing affair – and time spent waiting in some cases increases the damage to the victim – insurance firms usually opt to pay up front and figure out the blame afterward. They then need a way to get back the costs if, when all the facts are laid out, they weren't responsible for the expense.
Let's Look at an Example
You go to the doctor's office with a gouged finger. You give the nurse your health insurance card and he writes down your coverage details. You get stitches and your insurer gets a bill for the tab. But on the following afternoon, when you get to your workplace – where the accident occurred – your boss hands you workers compensation forms to file. Your employer's workers comp policy is in fact responsible for the bill, not your health insurance. It has a vested interest in getting that money back in some way.
How Subrogation Works
This is where subrogation comes in. It is the way that an insurance company uses to claim payment after it has paid for something that should have been paid by some other entity. 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 person 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 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 insurer who 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 unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its losses by ballooning your premiums. On the other hand, if it knows which cases it is owed and pursues them 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 at fault), you'll typically get $500 back, based on the laws in most states.
Furthermore, if the total price of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as workmen's compensation Dunwoody, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurers are not created equal. When shopping around, it's worth looking up the reputations of competing agencies to evaluate whether they pursue legitimate subrogation claims; if they resolve those claims quickly; if they keep their customers apprised as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your deductible 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 safeguarding its profitability by raising your premiums, you should keep looking.