Subrogation is an idea that's understood among legal and insurance professionals but often not by the customers they represent. 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 knowledgeable you are about it, the better decisions you can make about your insurance policy.
An insurance policy you own is an assurance that, if something bad happens to you, the insurer of the policy will make restitutions without unreasonable delay. If a hailstorm damages your house, for instance, your property insurance agrees to repay you or pay for the repairs, subject to state property damage laws.
But since figuring out who is financially responsible for services or repairs is sometimes a confusing affair – and delay often compounds the damage to the policyholder – insurance firms usually opt to pay up front and assign blame after the fact. They then need a path to get back the costs if, when all is said and done, they weren't responsible for the expense.
Can You Give an Example?
You head to the hospital with a sliced-open finger. You hand the receptionist your medical insurance card and he records your policy details. You get stitches and your insurance company is billed for the medical care. But on the following morning, when you get to your workplace – where the accident happened – your boss hands you workers compensation paperwork to turn in. Your employer's workers comp policy is actually responsible for the expenses, not your medical insurance. The latter has an interest in recovering its money somehow.
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. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is given some of your rights in exchange for making good on the damages. It can go after the money that was originally due to you, because it has covered the amount already.
Why Should I Care?
For one thing, 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 lost some money too – to the tune of $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to recover its expenses by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases enthusiastically, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half to blame), you'll typically get $500 back, based on the laws in most states.
Furthermore, if the total expense of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as wrongful termination lawyer University Place WA, pursue subrogation and wins, it will recover your losses in addition to its own.
All insurers are not created equal. When comparing, it's worth looking up the reputations of competing companies to find out whether they pursue winnable subrogation claims; if they do so without dragging their feet; if they keep their customers updated 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, on the other hand, an insurer has a reputation of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, you'll feel the sting later.