Subrogation is a term that's well-known in insurance and legal circles but rarely by the customers they represent. Even if you've never heard the word before, it would be in your benefit to understand an overview of how it works. The more information you have about it, the better decisions you can make about your insurance policy.
Every insurance policy you hold is a commitment that, if something bad occurs, the insurer of the policy will make restitutions without unreasonable delay. If you get hurt on the job, for example, your company's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially accountable for services or repairs is often a heavily involved affair – and delay often compounds the damage to the policyholder – insurance firms in many cases decide to pay up front and assign blame after the fact. They then need a method to regain the costs if, in the end, they weren't actually responsible for the payout.
Can You Give an Example?
You rush into the doctor's office with a sliced-open finger. You hand the receptionist your health insurance card and he writes down your policy information. You get taken care of and your insurance company gets a bill for the expenses. But the next morning, when you clock in at your place of employment – where the accident happened – you are given workers compensation paperwork to turn in. Your employer's workers comp policy is actually responsible for the invoice, not your health insurance policy. The latter has a right to recover its money somehow.
How Subrogation Works
This is where subrogation comes in. It is the process that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. 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 to your self or property. But under subrogation law, your insurance company is given 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 starters, if your insurance policy stipulated a deductible, your insurance company wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to recoup its expenses by ballooning your premiums. On the other hand, if it knows which cases it is owed and goes after those cases efficiently, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full $1,000 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, depending on the laws in your state.
Moreover, if the total cost of an accident is more than 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 business law salem ut, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurers are not the same. When shopping around, it's worth looking at the reputations of competing firms to determine whether they pursue winnable subrogation claims; if they resolve those claims without delay; if they keep their clients advised as the case goes on; 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 firm has a record of honoring claims that aren't its responsibility and then protecting its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.