Subrogation is an idea that's understood in legal and insurance circles but rarely by the policyholders they represent. Even if it sounds complicated, it is to your advantage to know the steps of the process. The more information you have, the more likely it is that an insurance lawsuit will work out favorably.
Every insurance policy you hold is a promise that, if something bad occurs, the insurer of the policy will make good in one way or another without unreasonable delay. 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 accountable for services or repairs is typically a time-consuming affair – and time spent waiting sometimes compounds the damage to the policyholder – insurance firms often opt to pay up front and assign blame later. They then need a mechanism to recoup the costs if, in the end, they weren't in charge of the payout.
Let's Look at an Example
You go to the Instacare with a deeply cut finger. You hand the receptionist your health insurance card and he takes down your plan information. You get stitched up and your insurance company gets an invoice for the expenses. But the next morning, when you get to work – where the accident occurred – your boss hands you workers compensation forms 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 somehow.
How Does Subrogation Work?
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 insurance firms 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 person or property. But under subrogation law, your insurance company 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 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 – to be precise, $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to get back its losses by raising your premiums. 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 ten grand is recovered, you will get your full 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 your state laws.
Furthermore, if the total cost 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 immigration attorney near me Herriman UT, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurance agencies are not created equal. When shopping around, it's worth comparing the records of competing firms to evaluate whether they pursue valid subrogation claims; if they do so fast; if they keep their accountholders apprised as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then protecting its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.