Subrogation is a concept that's well-known in insurance and legal circles but often not by the policyholders they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your self-interest to understand the steps of the process. The more information you have, the better decisions you can make about your insurance company.
Every insurance policy you own is a promise that, if something bad occurs, the company that insures the policy will make restitutions without unreasonable delay. If you get injured on the job, for example, your employer'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 accountable for services or repairs is regularly a time-consuming affair – and delay in some cases compounds the damage to the victim – insurance firms usually decide to pay up front and assign blame afterward. They then need a way to regain the costs if, ultimately, they weren't responsible for the payout.
Let's Look at an Example
You rush into the doctor's office with a deeply cut finger. You give the nurse your medical insurance card and he records your coverage information. You get taken care of and your insurance company gets a bill for the medical care. But on the following afternoon, when you arrive at your workplace – where the accident occurred – your boss hands you workers compensation paperwork to fill out. Your workers comp policy is actually responsible for the costs, not your medical insurance company. It has a vested interest in getting that money back in some way.
How Subrogation Works
This is where subrogation comes in. It is the way that an insurance company uses to claim payment after it has paid for something that should have been paid by some other entity. 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. Under ordinary circumstances, only you can sue for damages done to your self or property. But under subrogation law, your insurance company 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 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 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 get back its expenses by ballooning your premiums. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is acting both in its own interests and in yours. If all $10,000 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 culpable), you'll typically get half your deductible back, based on the laws in most states.
Moreover, 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 business law spanish fork ut, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurance agencies are not the same. When shopping around, it's worth examining the reputations of competing agencies to find out whether they pursue valid subrogation claims; if they do so fast; if they keep their clients updated as the case goes on; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, on the other hand, an insurance agency has a record of honoring claims that aren't its responsibility and then covering its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.