Subrogation is a term that's well-known in legal and insurance circles but rarely by the customers who hire them. Rather than leave it to the professionals, it would be in your benefit to know an overview of how it works. The more you know, the better decisions you can make about your insurance policy.
Any insurance policy you own is a commitment that, if something bad happens to you, the insurer of the policy will make good in one way or another without unreasonable delay. If you get an injury on the job, your company's workers compensation agrees to pay 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 often a confusing affair – and time spent waiting often adds to the damage to the policyholder – insurance companies usually opt to pay up front and figure out the blame afterward. They then need a way to get back the costs if, when all the facts are laid out, they weren't actually responsible for the payout.
Let's Look at an Example
You go to the Instacare with a sliced-open finger. You give the nurse your health insurance card and he writes down your coverage information. You get taken care of and your insurance company is billed for the services. But the next afternoon, when you get to work – where the accident happened – you are given workers compensation forms to turn in. Your employer's workers comp policy is in fact responsible for the costs, not your health insurance company. It has a vested interest in getting that money back in some way.
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement 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 insurance company is considered to have 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.
Why Do I Need to Know This?
For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurance company who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to the tune of $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to recoup its expenses by boosting your premiums. On the other hand, if it has a knowledgeable legal team and goes after those cases enthusiastically, it is doing you a favor as well as itself. If all $10,000 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 half your deductible back, based on the laws in most states.
Moreover, if the total price 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 personal injury legal assistance Tacoma Wa, pursue subrogation and wins, it will recover your losses in addition to its own.
All insurers are not the same. When comparing, it's worth weighing the records of competing agencies to evaluate whether they pursue winnable subrogation claims; if they resolve those claims quickly; if they keep their clients updated as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your deductible 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 protecting its income by raising your premiums, even attractive rates won't outweigh the eventual headache.