Subrogation is an idea that's understood in legal and insurance circles but rarely by the customers they represent. Even if you've never heard the word before, it would be in your benefit to comprehend the nuances of the process. The more knowledgeable you are about it, the better decisions you can make about your insurance company.
Any insurance policy you hold is an assurance that, if something bad happens to you, the company that insures the policy will make good in a timely manner. If you get an injury while working, for example, your company's workers compensation agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially responsible for services or repairs is often a tedious, lengthy affair – and time spent waiting sometimes compounds the damage to the policyholder – insurance firms often opt to pay up front and assign blame after the fact. They then need a way to recoup the costs if, when all is said and done, they weren't in charge of the payout.
Can You Give an Example?
You head to the emergency room with a gouged finger. You hand the nurse your health insurance card and she writes down your coverage information. You get stitched up and your insurance company is billed for the tab. But the next day, when you arrive at your place of employment – where the injury occurred – you are given workers compensation forms to fill out. Your workers comp policy is actually responsible for the bill, not your health insurance. The latter has a right to recover its money in some way.
How Does Subrogation Work?
This is where subrogation comes in. It is the way that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. 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 insurance company 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 Do I Need to Know This?
For a start, 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 insurance company is lax about bringing subrogation cases to court, it might opt to get back its costs by upping your premiums and call it a day. On the other hand, if it has a capable legal team and pursues those cases enthusiastically, it is acting both in its own interests and in yours. If all $10,000 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 accountable), you'll typically get half your deductible back, based on the laws in most states.
In addition, if the total loss of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as child custody court Henderson Nv, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurers are not the same. When comparing, it's worth contrasting the records of competing firms to find out whether they pursue valid subrogation claims; if they resolve those claims fast; if they keep their customers posted as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your deductible 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.