Subrogation is an idea that's well-known among insurance and legal professionals but rarely by the policyholders who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your benefit to comprehend an overview of how it works. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance company.
Any insurance policy you own is a commitment that, if something bad occurs, the firm that covers the policy will make good in one way or another in a timely manner. If you get an injury while you're on the clock, your company's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially accountable for services or repairs is typically a time-consuming affair – and delay often increases the damage to the policyholder – insurance companies usually opt to pay up front and figure out the blame later. They then need a method to recover the costs if, ultimately, they weren't in charge of the expense.
Let's Look at an Example
You go to the doctor's office with a sliced-open finger. You hand the receptionist your medical insurance card and he writes down your plan information. You get stitched up and your insurer gets a bill for the expenses. But the next morning, when you get to your place of employment – where the injury happened – you are given workers compensation paperwork to file. Your company's workers comp policy is actually responsible for the bill, not your medical insurance policy. It has a vested interest in getting that money back 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 companies 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 self or property. But under subrogation law, your insurer is extended some of your rights in exchange for making good on 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, your insurer wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to be precise, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to recover its expenses by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases enthusiastically, it is doing you a favor as well as itself. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent to blame), you'll typically get half your deductible back, based on the laws in most states.
Moreover, 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 family law firm Vancouver WA, pursue subrogation and succeeds, it will recover your expenses in addition to its own.
All insurers are not created equal. When shopping around, it's worth examining the records of competing agencies to find out whether they pursue legitimate subrogation claims; if they resolve those claims fast; if they keep their policyholders updated as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, instead, an insurance company has a record of paying out claims that aren't its responsibility and then covering its income by raising your premiums, even attractive rates won't outweigh the eventual headache.