Subrogation is a concept that's well-known in legal and insurance circles but rarely by the people 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 nuances of the process. The more information you have about it, the more likely it is that an insurance lawsuit will work out favorably.
An insurance policy you hold is a commitment that, if something bad happens to you, the insurer of the policy will make good in a timely manner. If your house is burglarized, your property insurance agrees to compensate you or enable the repairs, subject to state property damage laws.
But since figuring out who is financially accountable for services or repairs is often a tedious, lengthy affair – and delay sometimes increases the damage to the victim – insurance firms in many cases opt to pay up front and figure out the blame later. They then need a mechanism to recover the costs if, once the situation is fully assessed, they weren't actually responsible for the expense.
Can You Give an Example?
You go to the emergency room with a gouged finger. You give the nurse your medical insurance card and she records your policy information. You get stitches and your insurer is billed for the medical care. But on the following morning, when you arrive at your place of employment – where the injury happened – you are given workers compensation forms to file. Your company's workers comp policy is actually responsible for the invoice, not your medical insurance policy. It has a vested interest in getting that money back somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement 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. Under ordinary circumstances, only you can sue for damages to your self or property. But under subrogation law, your insurer is extended some of your rights for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Does This Matter to Me?
For a start, 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 lost some money too – to be precise, $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to recover its losses by increasing your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and goes after those cases efficiently, 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 culpable), you'll typically get half your deductible back, based on the laws in most states.
Moreover, 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 spendy. If your insurance company or its property damage lawyers, such as car accident attorney 99501, pursue subrogation and succeeds, it will recover your expenses in addition to its own.
All insurance companies are not created equal. When shopping around, it's worth looking up the reputations of competing firms to determine whether they pursue valid subrogation claims; if they resolve those claims without dragging their feet; if they keep their account holders apprised as the case continues; 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 insurer has a record of honoring claims that aren't its responsibility and then covering its profitability by raising your premiums, you'll feel the sting later.