Subrogation is a concept that's understood in insurance and legal circles but rarely by the customers they represent. Even if you've never heard the word before, it is to your advantage to comprehend an overview of how it works. The more you know about it, the better decisions you can make with regard to your insurance policy.
Any insurance policy you have is an assurance that, if something bad occurs, the firm that covers the policy will make good in one way or another without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and the judicial system, when necessary) decide who was at fault and that person's insurance covers the damages.
But since determining who is financially responsible for services or repairs is typically a tedious, lengthy affair – and delay sometimes adds to the damage to the victim – insurance firms often decide to pay up front and figure out the blame later. They then need a method to recoup the costs if, once the situation is fully assessed, they weren't in charge of the expense.
Can You Give an Example?
You arrive at the hospital with a sliced-open finger. You give the receptionist your health insurance card and he writes down your coverage details. You get taken care of and your insurance company is billed for the tab. But the next day, when you arrive at your workplace – where the injury happened – you are given workers compensation forms to turn in. Your company's workers comp policy is in fact responsible for the payout, not your health insurance. It has a vested interest in getting that money back somehow.
How Does Subrogation Work?
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 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 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 starters, if you have a deductible, it wasn't just your insurance company 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 get back its costs by increasing your premiums. On the other hand, if it knows which cases it is owed and goes after 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 deductible back. If it recovers half (for instance, in a case where you are found one-half culpable), you'll typically get $500 back, based on the laws in most states.
Furthermore, if the total loss of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as probate lawyer 53147, successfully press a subrogation case, it will recover your costs as well as its own.
All insurance agencies are not the same. When shopping around, it's worth looking at the records of competing agencies to find out if they pursue legitimate subrogation claims; if they resolve those claims without delay; if they keep their clients apprised as the case continues; and if they then process successfully won reimbursements immediately so that you can get your money back and move on with your life. If, instead, an insurer has a record of honoring claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you should keep looking.