Subrogation is a term that's well-known in legal and insurance circles but rarely by the customers who employ them. Even if you've never heard the word before, it would be in your benefit to know the nuances of how it works. The more knowledgeable you are, the better decisions you can make about your insurance policy.
Every insurance policy you hold is a commitment that, if something bad occurs, the firm on the other end of the policy will make restitutions in one way or another without unreasonable delay. If you get an injury while working, 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 confusing affair – and time spent waiting often increases the damage to the policyholder – insurance firms often opt to pay up front and assign blame later. They then need a means to recover the costs if, in the end, they weren't in charge of the payout.
Can You Give an Example?
You go to the hospital with a sliced-open finger. You hand the nurse your health insurance card and he records your plan information. You get stitched up and your insurance company gets an invoice for the tab. But on the following morning, when you arrive at your workplace – where the accident occurred – you are given workers compensation paperwork to turn in. Your company's workers comp policy is in fact responsible for the invoice, not your health insurance policy. It has a vested interest in getting that money back in some way.
How Subrogation Works
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 done to your person or property. But under subrogation law, your insurance company is extended 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.
How Does This Affect the Insured?
For starters, if your insurance policy stipulated a deductible, it wasn't just your insurance company 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 lax about bringing subrogation cases to court, it might choose to get back its costs by increasing your premiums. On the other hand, if it has a competent legal team and pursues those cases enthusiastically, it is doing you a favor as well as itself. 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 50 percent responsible), you'll typically get $500 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 lawyer 83101, pursue subrogation and succeeds, it will recover your costs in addition to its own.
All insurance agencies are not the same. When comparing, it's worth weighing the reputations of competing companies to determine if they pursue legitimate subrogation claims; if they resolve those claims with some expediency; if they keep their customers apprised as the case continues; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, instead, an insurance firm has a record of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, you should keep looking.