Subrogation is a term that's understood among legal and insurance professionals 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 in your self-interest to understand the steps of how it works. The more knowledgeable you are, the better decisions you can make with regard to your insurance company.
Every insurance policy you hold is a promise that, if something bad occurs, the insurer of the policy will make restitutions without unreasonable delay. If your property is burglarized, for instance, your property insurance agrees to compensate you or enable the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is usually a tedious, lengthy affair – and delay often compounds the damage to the victim – insurance firms in many cases decide to pay up front and assign blame later. They then need a mechanism to recover the costs if, when there is time to look at all the facts, they weren't in charge of the expense.
You head to the emergency room with a sliced-open finger. You give the nurse your health insurance card and he takes down your policy information. You get stitched up and your insurance company gets a bill for the tab. But on the following day, when you clock in at work – where the accident happened – you are given workers compensation paperwork to turn in. Your workers comp policy is in fact responsible for the expenses, not your health insurance. 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 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. Ordinarily, only you can sue for damages to your self or property. But under subrogation law, your insurance company is extended 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 Should I Care?
For one thing, 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 – to be precise, $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to recoup its expenses by ballooning 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 50 percent culpable), you'll typically get half your deductible back, depending on the laws in your state.
Additionally, if the total loss of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as immigration defense attorney Magna Ut, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurers are not created equal. When shopping around, it's worth comparing the records of competing companies to evaluate if they pursue legitimate subrogation claims; if they do so fast; if they keep their policyholders apprised as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your money back and move on with your life. If, on the other hand, an insurance agency has a reputation of honoring claims that aren't its responsibility and then covering its bottom line by raising your premiums, you should keep looking.