Subrogation is a concept that's well-known in legal and insurance circles but often not by the customers they represent. Even if it sounds complicated, it would be in your benefit to comprehend the nuances of how it works. The more you know, the better decisions you can make about your insurance policy.
An insurance policy you have is a promise that, if something bad happens to you, the company on the other end of the policy will make good in one way or another in a timely fashion. If your vehicle is rear-ended, insurance adjusters (and police, when necessary) determine who was at fault and that person's insurance covers the damages.
But since ascertaining who is financially responsible for services or repairs is usually a heavily involved affair – and time spent waiting sometimes compounds the damage to the policyholder – insurance firms usually decide to pay up front and figure out the blame later. They then need a way to recoup the costs if, when all the facts are laid out, they weren't actually responsible for the payout.
Can You Give an Example?
You arrive at the emergency room with a deeply cut finger. You give the receptionist your medical insurance card and she records your coverage details. You get taken care of and your insurance company is billed for the tab. But on the following day, when you arrive at your workplace – where the injury occurred – you are given workers compensation paperwork to file. Your workers comp policy is in fact responsible for the expenses, not your medical insurance company. The latter has an interest in recovering its costs in some way.
How Subrogation Works
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 companies 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 done to your self or property. But under subrogation law, your insurance company is considered to have some of your rights in exchange for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect the Insured?
For starters, if your insurance policy stipulated 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 – namely, $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to recoup its expenses by ballooning your premiums. On the other hand, if it has a proficient legal team and goes after them enthusiastically, it is acting both in its own interests and in yours. 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 at fault), you'll typically get half your deductible back, based on the laws in most states.
In addition, if the total cost 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 divorce lawyer 98501-1548, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurance agencies are not created equal. When comparing, it's worth comparing the reputations of competing companies to find out if they pursue winnable subrogation claims; if they do so without dragging their feet; if they keep their policyholders updated as the case continues; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, instead, an insurance agency has a record of honoring claims that aren't its responsibility and then protecting its profitability by raising your premiums, you'll feel the sting later.