Subrogation is an idea that's understood among legal and insurance professionals but often not by the people who hire them. Rather than leave it to the professionals, it would be in your self-interest to comprehend the nuances of the process. The more knowledgeable you are about it, the more likely an insurance lawsuit will work out favorably.
Any insurance policy you hold is a commitment that, if something bad occurs, the company that insures the policy will make good in a timely manner. If your vehicle is in a fender-bender, insurance adjusters (and the courts, when necessary) decide who was at fault and that person's insurance covers the damages.
But since ascertaining who is financially accountable for services or repairs is regularly a tedious, lengthy affair – and delay in some cases increases the damage to the policyholder – insurance companies usually opt to pay up front and figure out the blame later. They then need a path to regain 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 head to the emergency room with a gouged finger. You hand the nurse your health insurance card and she takes down your plan details. You get taken care of and your insurer gets an invoice for the expenses. But the next morning, when you arrive at work – where the injury happened – your boss hands you workers compensation forms to fill out. Your employer's workers comp policy is in fact responsible for the bill, not your health insurance policy. It has a vested interest in getting that money back somehow.
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement after it has paid for something that should have been paid by some other entity. 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 insurer is given some of your rights in exchange for having taken care of 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 starters, if you have a deductible, it wasn't just your insurer who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to get back its expenses by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them aggressively, it is doing you a favor as well as itself. If all of the money 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 responsible), you'll typically get half your deductible back, depending on your state laws.
In addition, if the total price of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as personal injury attorney glen burnie md, pursue subrogation and succeeds, it will recover your costs as well as its own.
All insurers are not the same. When shopping around, it's worth looking up the records of competing firms to find out if they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their accountholders informed as the case continues; and if they then process successfully won reimbursements right away so that you can get your losses back and move on with your life. If, on the other hand, an insurer has a record of paying out claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.