- 1 24, 2019
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Subrogation is an idea that's understood in legal and insurance circles but rarely by the policyholders they represent. Even if you've never heard the word before, it is to your advantage to know the steps of the process. The more you know, the better decisions you can make with regard to your insurance company.
Any insurance policy you hold is an assurance that, if something bad occurs, the insurer of the policy will make good in a timely manner. If you get an injury while you're on the clock, 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 responsible for services or repairs is typically a time-consuming affair – and delay in some cases compounds the damage to the policyholder – insurance firms usually decide to pay up front and assign blame afterward. They then need a way to get back the costs if, when all the facts are laid out, they weren't responsible for the expense.
Can You Give an Example?
You head to the hospital with a deeply cut finger. You give the receptionist your health insurance card and she takes down your coverage information. You get stitches and your insurer is billed for the medical care. But on the following morning, when you clock in at your workplace – where the accident happened – your boss hands you workers compensation paperwork to file. Your employer's workers comp policy is actually responsible for the costs, not your health insurance. The latter has a right to recover its costs in some way.
How Does Subrogation Work?
This is where subrogation comes in. It is the method 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. Ordinarily, only you can sue for damages done to your person or property. But under subrogation law, your insurer is given 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 Does This Matter to Me?
For one thing, if you have a deductible, your insurer 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 be precise, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to recoup its costs by upping your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and pursues them enthusiastically, it is acting both in its own interests and in yours. If all 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 half your deductible back, depending on the laws in your state.
In addition, if the total price of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as family law lawyer Holladay UT, pursue subrogation and wins, it will recover your losses as well as its own.
All insurance agencies are not the same. When shopping around, it's worth comparing the records of competing firms to evaluate if they pursue winnable subrogation claims; if they do so without dragging their feet; if they keep their accountholders posted as the case goes on; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, instead, an insurance agency has a reputation of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, even attractive rates won't outweigh the eventual headache.