Subrogation is a concept that's well-known in legal and insurance circles but rarely by the customers who employ them. Even if you've never heard the word before, it is to your advantage to comprehend the steps of the process. The more information you have, the better decisions you can make with regard to your insurance company.
Any insurance policy you hold is an assurance that, if something bad happens to you, the insurer of the policy will make good in a timely fashion. If you get hurt on the job, for example, your company's workers compensation insurance picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially responsible for services or repairs is typically a heavily involved affair – and time spent waiting sometimes adds to the damage to the policyholder – insurance firms in many cases decide to pay up front and assign blame later. They then need a mechanism to get back the costs if, when there is time to look at all the facts, they weren't actually responsible for the payout.
Can You Give an Example?
You go to the doctor's office with a gouged finger. You hand the receptionist your health insurance card and he takes down your plan information. You get stitches and your insurer gets a bill for the tab. But the next day, when you arrive at work – where the injury occurred – your boss hands you workers compensation forms to turn in. Your employer's workers comp policy is actually responsible for the bill, not your health insurance policy. The latter has a right to recover 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 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 insurer is given some of your rights in exchange for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Policyholders?
For one thing, if you have a deductible, it wasn't just your insurer 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 unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its expenses by boosting your premiums. On the other hand, if it knows which cases it is owed and goes after those cases aggressively, it is doing you a favor as well as itself. 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 50 percent culpable), you'll typically get half your deductible back, based on the laws in most states.
In addition, if the total cost of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as car accident lawyer Middle River MD, pursue subrogation and succeeds, it will recover your costs as well as its own.
All insurers are not the same. When comparing, it's worth researching the records of competing firms to determine whether they pursue winnable subrogation claims; if they resolve those claims quickly; if they keep their accountholders updated 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, on the other hand, an insurer has a reputation of paying out claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you'll feel the sting later.