Subrogation is a term that's understood among legal and insurance firms but rarely by the policyholders who hire them. Rather than leave it to the professionals, it is to your advantage to understand the steps of the process. The more knowledgeable you are about it, the better decisions you can make about your insurance policy.
Every insurance policy you have is an assurance that, if something bad occurs, the business on the other end of the policy will make good in one way or another without unreasonable delay. If you get hurt on the job, 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 often a time-consuming affair – and delay often increases the damage to the victim – insurance companies often decide to pay up front and figure out the blame afterward. They then need a mechanism to recover the costs if, when all is said and done, they weren't actually responsible for the expense.
Can You Give an Example?
You rush into the doctor's office with a sliced-open finger. You give the nurse your medical insurance card and he records your policy information. You get stitches and your insurance company gets a bill for the services. But on the following morning, when you arrive at work – where the injury occurred – your boss hands you workers compensation forms to file. Your workers comp policy is actually responsible for the expenses, not your medical insurance. It has a vested interest in getting that money back 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 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 person or property. But under subrogation law, your insurance company 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.
Why Do I Need to Know This?
For a start, if your insurance policy stipulated a deductible, it wasn't just your insurance company that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to be precise, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to get back its costs by upping your premiums. On the other hand, if it knows which cases it is owed and pursues them aggressively, it is acting both in its own interests and in yours. If all ten grand 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 at fault), you'll typically get half your deductible back, depending on your state laws.
Moreover, if the total cost of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as attorneys 98501, pursue subrogation and wins, it will recover your costs as well as its own.
All insurance companies are not the same. When comparing, it's worth looking at the reputations of competing firms to evaluate if they pursue legitimate subrogation claims; if they resolve those claims without delay; if they keep their accountholders informed as the case continues; 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 insurer has a record of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, you'll feel the sting later.