Subrogation is an idea that's well-known in insurance and legal circles but rarely by the people they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is to your advantage to know the nuances of the process. 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 occurs, the company that covers the policy will make good in a timely manner. If your vehicle is rear-ended, insurance adjusters (and the courts, when necessary) decide who was to blame and that party's insurance covers the damages.
But since ascertaining who is financially responsible for services or repairs is often a time-consuming affair – and delay sometimes increases the damage to the policyholder – insurance firms usually opt to pay up front and assign blame after the fact. They then need a means to recoup the costs if, in the end, they weren't in charge of the expense.
Let's Look at an Example
You arrive at the emergency room with a gouged finger. You give the nurse your medical insurance card and he records your coverage details. You get stitches and your insurer is billed for the services. But on the following day, when you arrive at your workplace – where the accident occurred – your boss hands you workers compensation paperwork to turn in. Your employer's workers comp policy is in fact responsible for the hospital trip, not your medical insurance policy. It has a vested interest in getting that money back in some way.
How Does Subrogation Work?
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. Usually, only you can sue for damages to your self or property. But under subrogation law, your insurer is given some of your rights 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 a start, if your insurance policy stipulated a deductible, your insurer wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its losses by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases enthusiastically, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full thousand-dollar 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.
Additionally, if the total expense of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as child custody court boulder city Nv, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurance agencies are not created equal. When shopping around, it's worth scrutinizing the reputations of competing agencies to evaluate whether they pursue winnable subrogation claims; if they resolve those claims without delay; if they keep their customers advised as the case continues; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, on the other hand, an insurance firm has a record of honoring claims that aren't its responsibility and then covering its income by raising your premiums, even attractive rates won't outweigh the eventual headache.