Subrogation is a term that's understood in insurance and legal circles but often not by the policyholders who hire them. Even if you've never heard the word before, it is in your self-interest to comprehend an overview of the process. The more information you have, the better decisions you can make with regard to your insurance company.
An insurance policy you hold is a promise that, if something bad happens to you, the insurer of the policy will make good in one way or another without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and the judicial system, when necessary) determine who was to blame and that party's insurance pays out.
But since determining who is financially accountable for services or repairs is typically a tedious, lengthy affair – and time spent waiting sometimes adds to the damage to the policyholder – insurance companies usually opt to pay up front and figure out the blame later. They then need a means to recoup the costs if, when all the facts are laid out, they weren't responsible for the expense.
Can You Give an Example?
You rush into the Instacare with a gouged finger. You give the nurse your medical insurance card and she records your plan information. You get stitches and your insurance company gets an invoice for the services. But the next morning, when you arrive at work – where the injury occurred – you are given workers compensation forms to turn in. Your workers comp policy is in fact responsible for the expenses, not your medical insurance company. 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 method 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 to your self or property. But under subrogation law, your insurance company is extended some of your rights in exchange for having taken care of 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 Policyholders?
For one thing, 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 opt to recover its losses by boosting your premiums. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is doing you a favor as well as itself. If all ten grand 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 culpable), you'll typically get $500 back, based on the laws in most states.
Furthermore, if the total cost 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 lacey wa, pursue subrogation and wins, it will recover your costs in addition to its own.
All insurers are not the same. When shopping around, it's worth looking at the records of competing companies to evaluate whether they pursue valid subrogation claims; if they resolve those claims with some expediency; if they keep their clients apprised as the case continues; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, on the other hand, an insurance firm has a record of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, you'll feel the sting later.