Subrogation is a concept that's well-known among insurance and legal professionals but rarely by the policyholders who hire them. Rather than leave it to the professionals, it would be in your benefit to comprehend the steps of how it works. The more knowledgeable you are about it, the more likely it is that an insurance lawsuit will work out favorably.
Any insurance policy you hold is an assurance that, if something bad happens to you, the insurer of the policy will make restitutions without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and the judicial system, when necessary) determine who was at fault and that party's insurance pays out.
But since ascertaining who is financially accountable for services or repairs is usually a confusing affair – and time spent waiting in some cases increases the damage to the policyholder – insurance companies often decide to pay up front and figure out the blame later. They then need a method to regain the costs if, once the situation is fully assessed, they weren't responsible for the expense.
Can You Give an Example?
You rush into the Instacare with a gouged finger. You hand the receptionist your medical insurance card and she writes down your plan information. You get taken care of and your insurance company gets an invoice for the tab. But on the following afternoon, when you clock in at work – where the accident happened – you are given workers compensation forms to turn in. Your workers comp policy is in fact responsible for the invoice, not your medical insurance policy. The latter has an interest in recovering its money somehow.
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 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 considered to have some of your rights 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 Does This Matter to Me?
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 – namely, $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to recover its costs by upping your premiums. On the other hand, if it knows which cases it is owed and goes after those cases aggressively, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent responsible), you'll typically get half your deductible back, depending on the laws in your state.
Additionally, if the total price of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as foreclosure defense lawyer Batesville AR, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurers are not the same. When shopping around, it's worth examining the reputations of competing agencies to determine whether they pursue legitimate subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their accountholders posted as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, instead, an insurance company has a reputation of honoring claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you'll feel the sting later.