Subrogation is a concept that's understood in insurance and legal circles but often not 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 understand the steps of the process. The more you know, the better decisions you can make with regard to your insurance policy.
Any insurance policy you have is an assurance that, if something bad happens to you, the company on the other end of the policy will make restitutions in a timely manner. If a windstorm damages your house, for example, your property insurance agrees to pay you or pay for the repairs, subject to state property damage laws.
But since ascertaining who is financially responsible for services or repairs is regularly a tedious, lengthy affair – and delay sometimes increases the damage to the policyholder – insurance firms often opt to pay up front and assign blame later. They then need a way to recover the costs if, once the situation is fully assessed, they weren't actually responsible for the expense.
Let's Look at an Example
You arrive at the emergency room with a sliced-open finger. You hand the nurse your health insurance card and he records your coverage information. You get taken care of and your insurance company is billed for the expenses. But the next morning, when you get to your workplace – where the accident happened – you are given workers compensation forms to turn in. Your workers comp policy is actually responsible for the invoice, not your health insurance policy. The latter has a right to recover its costs in some way.
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement 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 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, your insurance company wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – namely, $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to recover its losses by boosting your premiums. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full thousand-dollar 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, based on the laws in most states.
Moreover, if the total loss 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 legal counsel spanish fork ut, pursue subrogation and wins, it will recover your costs as well as its own.
All insurers are not created equal. When shopping around, it's worth looking up the records of competing firms to find out whether they pursue valid subrogation claims; if they resolve those claims without dragging their feet; if they keep their accountholders posted as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, instead, an insurance company has a reputation of honoring claims that aren't its responsibility and then safeguarding its income by raising your premiums, you'll feel the sting later.