Subrogation is a concept that's well-known in legal and insurance circles but often not by the people they represent. Even if you've never heard the word before, it is in your benefit to comprehend the nuances of the process. The more knowledgeable you are about it, the better decisions you can make about your insurance company.
An insurance policy you hold is a commitment that, if something bad happens to you, the firm that insures the policy will make restitutions in one way or another without unreasonable delay. If you get an injury while working, for instance, your company's workers compensation agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially responsible for services or repairs is often a time-consuming affair – and time spent waiting in some cases adds to the damage to the victim – insurance firms usually opt to pay up front and assign blame later. They then need a method to recoup the costs if, once the situation is fully assessed, they weren't responsible for the payout.
Can You Give an Example?
You head to the doctor's office with a gouged finger. You hand the receptionist your health insurance card and she writes down your plan information. You get taken care of and your insurer is billed for the medical care. But the next afternoon, when you arrive at your workplace – where the injury occurred – your boss hands you workers compensation paperwork to file. Your employer's workers comp policy is actually responsible for the payout, not your health insurance. It has a vested interest in getting that money back somehow.
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 companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurer is considered to have some of your rights 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 Me?
For a start, if you have a deductible, your insurer wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to recoup its costs by upping your premiums. On the other hand, if it has a competent legal team and pursues them enthusiastically, it is doing you a favor as well as itself. 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 at fault), you'll typically get $500 back, depending on your state laws.
Moreover, if the total price 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 lawsuit lawyer spanish fork ut, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurers are not created equal. When shopping around, it's worth looking at the reputations of competing firms to determine whether they pursue valid 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 immediately so that you can get your losses 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 safeguarding its profit margin by raising your premiums, you'll feel the sting later.