Subrogation is a concept that's well-known among legal and insurance firms but sometimes not by the policyholders they represent. Rather than leave it to the professionals, it is in your benefit to understand the nuances of how it works. The more you know, the more likely an insurance lawsuit will work out favorably.
An insurance policy you have is a promise that, if something bad happens to you, the company that insures the policy will make restitutions in a timely manner. If you get injured at work, your employer's workers compensation pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially accountable for services or repairs is typically a time-consuming affair – and delay in some cases adds to the damage to the victim – insurance companies usually opt to pay up front and figure out the blame later. They then need a way to recover the costs if, when all the facts are laid out, they weren't actually in charge of the payout.
Can You Give an Example?
You head to the doctor's office with a sliced-open finger. You give the nurse your medical insurance card and he writes down your policy details. You get taken care of and your insurance company is billed for the tab. But on the following afternoon, when you arrive at work – where the accident occurred – you are given 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 money somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the process that an insurance company uses to claim payment after it has paid for something that should have been paid by some other entity. 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. Under ordinary circumstances, only you can sue for damages done to your person 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.
How Does This Affect Policyholders?
For one thing, if your insurance policy stipulated a deductible, your insurance company wasn't the only one 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 recoup its expenses by ballooning your premiums and call it a day. 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 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 one-half responsible), you'll typically get $500 back, depending on the laws in your state.
Moreover, if the total loss 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 attorneys lacey wa, pursue subrogation and wins, it will recover your losses in addition to its own.
All insurers are not the same. When shopping around, it's worth scrutinizing the records of competing agencies to evaluate if they pursue winnable subrogation claims; if they do so with some expediency; if they keep their policyholders advised as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, instead, an insurance firm has a reputation of honoring claims that aren't its responsibility and then covering its income by raising your premiums, you'll feel the sting later.