Subrogation is an idea that's understood among insurance and legal professionals but rarely by the customers they represent. Even if you've never heard the word before, it would be in your benefit to know an overview of how it works. The more knowledgeable you are, the more likely it is that relevant proceedings will work out favorably.
Every insurance policy you own is a commitment that, if something bad occurs, the insurer of the policy will make good without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and the courts, when necessary) determine who was at fault and that person's insurance pays out.
But since determining who is financially accountable for services or repairs is regularly a tedious, lengthy affair – and delay sometimes increases the damage to the victim – insurance firms usually decide to pay up front and assign blame later. They then need a method to get back the costs if, once the situation is fully assessed, they weren't in charge of the expense.
You arrive at the Instacare with a gouged finger. You hand the nurse your medical insurance card and he takes down your policy details. You get stitches and your insurance company gets a bill for the tab. But the next morning, when you arrive at your place of employment – where the injury happened – you are given workers compensation paperwork to fill out. Your workers comp policy is actually responsible for the hospital trip, not your medical 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 reimbursement when it pays out a claim that turned out not to be its responsibility. Some insurance firms 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 self or property. But under subrogation law, your insurance company is considered to have some of your rights in exchange for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Individuals?
For one thing, if you have a deductible, it wasn't just your insurance company who 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 recoup its losses by raising your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and pursues them enthusiastically, it is doing you a favor as well as itself. 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 one-half to blame), you'll typically get half your deductible back, depending on your state laws.
Moreover, if the total price 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 family law firm Vancouver WA, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurance companies are not created equal. When comparing, it's worth examining the reputations of competing agencies to determine if they pursue legitimate subrogation claims; if they resolve those claims without delay; if they keep their customers posted as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, instead, an insurance company has a record of honoring claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you should keep looking.