Subrogation is an idea that's well-known in insurance and legal circles but often not by the policyholders they represent. Even if you've never heard the word before, it would be in your benefit to understand the steps of the process. The more knowledgeable you are, the more likely relevant proceedings will work out favorably.
Every insurance policy you own is an assurance that, if something bad happens to you, the firm that insures the policy will make restitutions in a timely fashion. If your vehicle is rear-ended, insurance adjusters (and the judicial system, when necessary) decide who was to blame and that person's insurance pays out.
But since figuring out who is financially accountable for services or repairs is typically a time-consuming affair – and delay often adds to the damage to the victim – insurance firms in many cases opt to pay up front and figure out the blame after the fact. They then need a mechanism to recoup the costs if, once the situation is fully assessed, they weren't actually in charge of the payout.
Let's Look at an Example
You rush into the hospital with a gouged finger. You give the nurse your health insurance card and she writes down your plan information. You get stitched up and your insurer gets an invoice for the tab. But the next morning, when you arrive at your workplace – where the injury happened – you are given workers compensation forms to file. Your workers comp policy is in fact responsible for the expenses, not your health insurance policy. The latter has an interest in recovering its money in some way.
How Subrogation Works
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 companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Under ordinary circumstances, only you can sue for damages done to your person or property. But under subrogation law, your insurer is extended some of your rights in exchange 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 insurer who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to be precise, $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to recoup 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 $1,000 deductible back. If it recovers half (for instance, in a case where you are found one-half culpable), you'll typically get half your deductible back, depending on your state laws.
In addition, if the total cost 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 child custody court Henderson Nv, pursue subrogation and succeeds, it will recover your costs as well as its own.
All insurance agencies are not created equal. When comparing, it's worth looking up the reputations of competing firms to evaluate whether they pursue winnable subrogation claims; if they do so in a reasonable amount of time; if they keep their accountholders advised as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, instead, an insurance firm has a reputation of honoring claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you should keep looking.