Subrogation is a term that's understood among legal and insurance firms but rarely by the people who employ them. Even if it sounds complicated, it would be to your advantage to know an overview of how it works. The more information you have about it, the better decisions you can make with regard to your insurance policy.
Any insurance policy you hold is a promise that, if something bad happens to you, the business that covers the policy will make good in a timely manner. If you get an injury at work, your employer's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially accountable for services or repairs is often a confusing affair – and delay sometimes increases the damage to the victim – insurance firms in many cases decide to pay up front and assign blame after the fact. They then need a means to get back the costs if, when all is said and done, they weren't responsible for the payout.
Can You Give an Example?
You head to the emergency room with a gouged finger. You give the receptionist your medical insurance card and she records your plan information. You get taken care of and your insurance company gets a bill for the medical care. But the next morning, when you clock in at work – where the injury happened – you are given workers compensation forms to file. Your workers comp policy is actually responsible for the expenses, not your medical insurance policy. It has a vested interest in getting that money back in some way.
How Does Subrogation Work?
This is where subrogation comes in. It is the method that an insurance company uses to claim payment after it has paid for something that should have been paid by some other entity. 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. Under ordinary circumstances, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is given 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.
Why Do I Need to Know This?
For starters, if you have a deductible, it wasn't just your insurance company who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to get back its losses by raising your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues 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 to blame), 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 could be in for a stiff bill. If your insurance company or its property damage lawyers, such as workmans comp Milton, ga, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurers are not created equal. When comparing, it's worth researching the reputations of competing companies to find out if they pursue valid subrogation claims; if they resolve those claims without delay; if they keep their customers posted as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, instead, an insurer has a reputation of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, you should keep looking.