Subrogation is a concept that's understood among insurance and legal companies but sometimes not by the policyholders who hire them. Even if you've never heard the word before, it is in your benefit to know the nuances of how it works. The more knowledgeable you are about it, the more likely it is that relevant proceedings will work out favorably.
Any insurance policy you hold is a commitment that, if something bad happens to you, the company on the other end of the policy will make good without unreasonable delay. If you get injured on the job, your employer's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially responsible for services or repairs is often a tedious, lengthy affair – and time spent waiting in some cases adds to the damage to the victim – insurance firms often opt to pay up front and figure out the blame after the fact. They then need a means to recoup the costs if, when there is time to look at all the facts, they weren't responsible for the payout.
Can You Give an Example?
You go to the Instacare with a deeply cut finger. You hand the nurse your medical insurance card and she records your plan information. You get stitches and your insurance company gets a bill for the expenses. But the next morning, when you get to your place of employment – where the accident happened – your boss hands you workers compensation paperwork to file. Your employer's workers comp policy is in fact responsible for the hospital trip, not your medical insurance policy. It has a vested interest in getting that money back somehow.
How Does Subrogation Work?
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 insurance firms 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 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 Should I Care?
For one thing, if you have 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 – to the tune of $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recoup its costs by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases aggressively, it is doing you a favor as well as itself. 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 the laws in your state.
Additionally, if the total loss of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as criminal defense lawyer 23294, pursue subrogation and wins, it will recover your losses in addition to its own.
All insurance agencies are not created equal. When shopping around, it's worth contrasting the records of competing agencies to determine if they pursue valid subrogation claims; if they resolve those claims without dragging their feet; if they keep their accountholders advised as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your funding 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 covering its profitability by raising your premiums, you'll feel the sting later.