Subrogation is a term that's understood among insurance and legal professionals but rarely by the customers they represent. Even if it sounds complicated, it would be to your advantage to comprehend the nuances of how it works. The more knowledgeable you are about it, the better decisions you can make about your insurance company.
An 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 in one way or another without unreasonable delay. If you get injured while working, for instance, your employer's workers compensation insurance pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially accountable for services or repairs is often a heavily involved affair – and time spent waiting sometimes adds to the damage to the victim – insurance companies in many cases opt to pay up front and assign blame after the fact. They then need a mechanism to get back the costs if, once the situation is fully assessed, they weren't responsible for the payout.
Can You Give an Example?
You go to the hospital with a deeply cut finger. You give the nurse your medical insurance card and she records your policy details. You get stitched up and your insurance company is billed for the medical care. But the next morning, when you get to your place of employment – where the accident happened – your boss hands you workers compensation paperwork to fill out. Your employer's workers comp policy is actually responsible for the expenses, not your medical insurance policy. 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 reimbursement 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. Usually, only you can sue for damages to your self or property. But under subrogation law, your insurance company is considered to have 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 Should I Care?
For one thing, 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 – to be precise, $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to get back its losses by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them aggressively, it is doing you a favor as well as itself. 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 50 percent culpable), you'll typically get half your deductible back, depending on your state laws.
Additionally, if the total loss of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as wills & trust 66061, pursue subrogation and wins, it will recover your costs in addition to its own.
All insurers are not created equal. When comparing, it's worth measuring the records of competing companies to determine whether they pursue valid subrogation claims; if they do so quickly; if they keep their policyholders informed as the case continues; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, on the other hand, an insurance company has a reputation of honoring claims that aren't its responsibility and then covering its profit margin by raising your premiums, you should keep looking.