Subrogation is a term that's well-known among insurance and legal firms but sometimes not by the policyholders who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your self-interest to comprehend the steps of the process. The more information you have about it, the more likely an insurance lawsuit will work out in your favor.
Any insurance policy you hold is an assurance that, if something bad occurs, the insurer of the policy will make restitutions in one way or another in a timely fashion. If your vehicle is hit, insurance adjusters (and the courts, when necessary) decide who was to blame and that party's insurance pays out.
But since ascertaining who is financially accountable for services or repairs is typically a time-consuming affair – and time spent waiting in some cases compounds the damage to the policyholder – insurance companies usually decide to pay up front and assign blame after the fact. They then need a way to get back the costs if, when all is said and done, they weren't actually responsible for the payout.
Let's Look at an Example
You go to the emergency room with a gouged finger. You hand the receptionist your health insurance card and he records your plan details. You get stitched up and your insurer gets an invoice for the services. But on the following day, when you arrive at work – where the accident occurred – you are given workers compensation paperwork to turn in. Your workers comp policy is actually responsible for the bill, not your health insurance. The latter has an interest in recovering its costs somehow.
How Subrogation Works
This is where subrogation comes in. It is the process that an insurance company uses to claim payment after it has paid for something that should have been paid by some other entity. Some companies 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 to your self or property. But under subrogation law, your insurer is given 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 one thing, if your insurance policy stipulated 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 the tune of $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to get back its losses by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them efficiently, it is doing you a favor as well as itself. If all $10,000 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 accountable), you'll typically get half your deductible back, depending on your state laws.
In addition, if the total loss of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as accident lawyer pasadena, md, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurers are not the same. When shopping around, it's worth scrutinizing the records of competing companies to determine whether they pursue legitimate subrogation claims; if they resolve those claims fast; if they keep their clients advised as the case proceeds; 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 firm has a reputation of honoring claims that aren't its responsibility and then covering its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.