Subrogation is an idea that's well-known in insurance and legal circles but sometimes not by the customers who hire them. Rather than leave it to the professionals, it is to your advantage to understand the nuances of how it works. The more information you have, the better decisions you can make with regard to your insurance company.
An insurance policy you have is an assurance that, if something bad happens to you, the business that insures the policy will make restitutions in one way or another in a timely manner. If your vehicle is rear-ended, insurance adjusters (and the courts, when necessary) decide who was at fault and that person's insurance pays out.
But since ascertaining who is financially accountable for services or repairs is usually a time-consuming affair – and delay sometimes increases the damage to the victim – insurance companies usually opt to pay up front and assign blame later. They then need a path to get back the costs if, when all is said and done, they weren't actually responsible for the expense.
Can You Give an Example?
You rush into the Instacare with a gouged finger. You hand the receptionist your health insurance card and she writes down your coverage details. You get stitched up and your insurance company gets a bill for the medical care. But on the following morning, when you get to your workplace – where the injury happened – you are given workers compensation forms to file. Your employer's workers comp policy is in fact responsible for the payout, 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 process that an insurance company uses to claim payment 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. Normally, only you can sue for damages to your person or property. But under subrogation law, your insurance company is considered to have some of your rights 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 Me?
For one thing, 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 – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to recoup its costs by raising your premiums. On the other hand, if it has a knowledgeable legal team and goes after them aggressively, it is acting both in its own interests and in yours. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent culpable), you'll typically get half your deductible back, based on the laws in most states.
Moreover, if the total loss of an accident is more than 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 lawyers near me Henderson NV, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurance agencies are not the same. When shopping around, it's worth examining the records of competing agencies to find out whether they pursue legitimate subrogation claims; if they do so with some expediency; if they keep their accountholders posted as the case continues; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, instead, an insurance firm has a reputation of paying out claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.