Subrogation is a term that's understood among insurance and legal companies but sometimes not by the people who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your self-interest to comprehend the nuances of how it works. The more information you have, the more likely it is that an insurance lawsuit will work out in your favor.
An insurance policy you own is a promise that, if something bad happens to you, the company that insures the policy will make restitutions in one way or another in a timely manner. If you get an injury on the job, your company's workers compensation picks up the tab 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 usually a confusing affair – and time spent waiting in some cases compounds the damage to the policyholder – insurance firms in many cases decide to pay up front and figure out the blame afterward. They then need a means to regain the costs if, when all is said and done, they weren't responsible for the expense.
You rush into the hospital with a deeply cut finger. You hand the nurse your medical insurance card and she takes down your policy information. You get taken care of and your insurance company gets a bill for the tab. But on the following afternoon, when you clock in at your place of employment – where the injury happened – your boss hands you workers compensation forms to fill out. Your workers comp policy is in fact responsible for the payout, not your medical insurance company. The latter has a right to recover its costs somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the process 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. Ordinarily, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is considered to have some of your rights for making good on 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 a start, 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 have a stake in the outcome as well – to the tune of $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to recover its expenses by ballooning your premiums and call it a day. On the other hand, if it has a capable legal team and pursues them efficiently, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full 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 the laws in your state.
Furthermore, if the total loss 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 workers compensation attorney Reisterstown MD, pursue subrogation and wins, it will recover your losses in addition to its own.
All insurance companies are not the same. When shopping around, it's worth contrasting the records of competing agencies to evaluate whether they pursue winnable subrogation claims; if they resolve those claims without dragging their feet; if they keep their customers apprised as the case goes on; 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 insurer has a record of honoring claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you'll feel the sting later.