Subrogation is a term that's well-known among insurance and legal companies but often not by the policyholders who hire 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 how it works. The more information you have, the more likely it is that an insurance lawsuit will work out favorably.
Every insurance policy you own is a commitment that, if something bad occurs, the insurer of the policy will make restitutions in a timely manner. If you get injured on the job, for instance, your company's workers compensation insurance picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially responsible for services or repairs is regularly a heavily involved affair – and delay in some cases increases the damage to the victim – insurance companies often decide to pay up front and assign blame later. They then need a method to recoup the costs if, when there is time to look at all the facts, they weren't actually responsible for the expense.
Let's Look at an Example
You arrive at the hospital with a deeply cut finger. You hand the receptionist your health insurance card and he records your policy details. You get stitches and your insurer gets a bill for the tab. But the next afternoon, when you arrive at work – where the accident happened – your boss hands you workers compensation forms to turn in. Your workers comp policy is actually responsible for the expenses, not your health insurance policy. The latter has a right to recover its costs 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. Under ordinary circumstances, only you can sue for damages to your person or property. But under subrogation law, your insurer is considered to have some of your rights in exchange for having taken care of the damages. It can go after the money that was originally due to you, because it has covered the amount already.
How Does This Affect the Insured?
For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurer that 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 recover its costs by upping your premiums and call it a day. On the other hand, if it has a competent legal team and goes after them efficiently, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent responsible), you'll typically get half your deductible back, depending on your state laws.
In addition, if the total expense 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 custody attorney Lindon ut, pursue subrogation and succeeds, it will recover your expenses in addition to its own.
All insurance companies are not created equal. When comparing, it's worth looking up the reputations of competing companies to determine if they pursue winnable subrogation claims; if they resolve those claims fast; if they keep their policyholders posted as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, on the other hand, an insurer has a reputation of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, you should keep looking.