Subrogation is an idea that's understood among insurance and legal companies but sometimes not by the customers who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your benefit to understand an overview of how it works. The more knowledgeable you are about it, the more likely an insurance lawsuit will work out in your favor.
An insurance policy you own is an assurance that, if something bad occurs, the company that insures the policy will make good without unreasonable delay. If your house is broken into, your property insurance steps in to pay you or enable the repairs, subject to state property damage laws.
But since ascertaining who is financially responsible for services or repairs is sometimes a confusing affair – and time spent waiting in some cases compounds the damage to the victim – insurance firms often decide to pay up front and assign blame after the fact. They then need a means to get back the costs if, ultimately, they weren't actually responsible for the payout.
Can You Give an Example?
You rush into the emergency room with a deeply cut finger. You give the receptionist your medical insurance card and she records your policy information. You get taken care of and your insurance company gets an invoice for the services. But the next day, when you clock in at your place of employment – where the injury occurred – your boss hands you workers compensation forms to file. Your company's workers comp policy is actually responsible for the bill, not your medical insurance policy. The latter has a right to recover its costs 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. Under ordinary circumstances, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is given 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.
Why Does This Matter to Me?
For a start, 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 lost some money too – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to get back its losses by boosting your premiums. On the other hand, if it knows which cases it is owed 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 $1,000 deductible back. If it recovers half (for instance, in a case where you are found one-half accountable), you'll typically get half your deductible back, based on the laws in most states.
Moreover, if the total expense 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 attorney Olympia, WA, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurers are not created equal. When shopping around, it's worth weighing the reputations of competing companies to evaluate if they pursue valid subrogation claims; if they resolve those claims fast; if they keep their clients posted as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, on the other hand, an insurance company has a reputation of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, you'll feel the sting later.