The Things You Need to Know About Subrogation

Subrogation is an idea that's understood among insurance and legal professionals but often not by the people they represent. Even if it sounds complicated, it is in your self-interest to comprehend the nuances of the process. The more knowledgeable you are, the better decisions you can make with regard to your insurance policy.

An insurance policy you have is a commitment that, if something bad happens to you, the insurer of the policy will make good in one way or another in a timely manner. If you get hurt while you're on the clock, your company's workers compensation pays out for medical services. Employment lawyers handle the details; you just get fixed up.

But since ascertaining who is financially responsible for services or repairs is often a confusing affair – and delay often increases the damage to the policyholder – insurance firms in many cases decide to pay up front and assign blame after the fact. They then need a mechanism to recover the costs if, in the end, they weren't actually responsible for the payout.

For Example

You rush into the hospital with a sliced-open finger. You give the nurse your health insurance card and she writes down your coverage details. You get stitches and your insurance company gets an invoice for the services. But on the following afternoon, when you get to your workplace – where the accident happened – your boss hands you workers compensation forms to file. Your employer's workers comp policy is actually responsible for the expenses, not your health insurance policy. The latter has an interest in recovering its money somehow.

How Does Subrogation Work?

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. Ordinarily, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is extended 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 Do I Need to Know This?

For one thing, 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 choose to recoup its expenses by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases enthusiastically, 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 accountable), you'll typically get $500 back, based on the laws in most states.

In addition, if the total loss of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as auto accident lawyer Lithia springs GA, pursue subrogation and wins, it will recover your expenses as well as its own.

All insurance companies are not the same. When shopping around, it's worth measuring the records of competing agencies to find out whether they pursue valid subrogation claims; if they do so quickly; if they keep their customers advised as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, instead, an insurance firm has a reputation of paying out claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.