Subrogation is a term that's well-known in legal and insurance circles but sometimes not by the people they represent. Rather than leave it to the professionals, it is to your advantage to comprehend an overview of how it works. The more you know, the better decisions you can make with regard to your insurance policy.
Every insurance policy you own is an assurance that, if something bad happens to you, the company on the other end of the policy will make good in one way or another without unreasonable delay. If you get hurt at work, your company's workers compensation insurance picks up the tab 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 delay sometimes adds to the damage to the policyholder – insurance companies usually decide to pay up front and figure out the blame later. They then need a mechanism to get back the costs if, when there is time to look at all the facts, they weren't actually in charge of the expense.
You head to the Instacare with a deeply cut finger. You give the nurse your medical insurance card and she records your plan information. You get stitched up and your insurance company gets a bill for the expenses. But the next morning, when you arrive at work – where the injury happened – you are given workers compensation forms to turn in. Your employer's workers comp policy is in fact responsible for the invoice, 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 way that an insurance company uses to claim payment 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. Normally, 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 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 Policyholders?
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 – to the tune of $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to recover its expenses by boosting your premiums. On the other hand, if it has a knowledgeable legal team and goes after them enthusiastically, it is acting both in its own interests and in yours. If all of the money 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 responsible), you'll typically get $500 back, depending on your state laws.
Moreover, if the total expense of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as criminal defense lawyer 23294, 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 measuring the records of competing agencies to find out if they pursue legitimate subrogation claims; if they do so fast; if they keep their policyholders advised as the case continues; and if they then process successfully won reimbursements right away so that you can get your losses back and move on with your life. If, instead, an insurance company has a record of paying out claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you should keep looking.