Subrogation is a concept that's understood in insurance and legal circles but sometimes not by the people they represent. Rather than leave it to the professionals, it is to your advantage to know an overview of how it works. The more you know, the more likely it is that relevant proceedings will work out in your favor.
An insurance policy you hold is a commitment that, if something bad occurs, the insurer of the policy will make good in one way or another without unreasonable delay. If you get an injury on the job, your company's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially accountable for services or repairs is usually a tedious, lengthy affair – and time spent waiting often compounds the damage to the policyholder – insurance firms in many cases decide to pay up front and figure out the blame afterward. They then need a method to get back the costs if, in the end, they weren't in charge of the payout.
Can You Give an Example?
You head to the doctor's office with a deeply cut finger. You give the nurse your health insurance card and she writes down your plan details. You get taken care of and your insurer gets a bill for the tab. But on the following day, when you arrive at your place of employment – where the accident happened – you are given workers compensation forms to fill out. Your workers comp policy is actually responsible for the hospital visit, 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 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. Ordinarily, only you can sue for damages done to your person or property. But under subrogation law, your insurer is extended some of your rights in exchange for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Should I Care?
For a start, if your insurance policy stipulated a deductible, your insurer wasn't the only one who 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 unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its losses by boosting your premiums and call it a day. On the other hand, if it has a proficient legal team and goes after those cases aggressively, it is doing you a favor as well as itself. If all 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.
Furthermore, if the total loss 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 death attorney Puyallup, Wa, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurance agencies are not the same. When comparing, it's worth researching the reputations of competing agencies to determine whether they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their accountholders apprised as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, instead, an insurance company has a record of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, you'll feel the sting later.