Subrogation is a term that's well-known among legal and insurance companies but rarely by the customers who employ them. Even if you've never heard the word before, it would be to your advantage to know the steps of the process. The more you know, the better decisions you can make with regard to your insurance company.
An insurance policy you hold is an assurance that, if something bad occurs, the firm on the other end of the policy will make restitutions in a timely manner. If a blizzard damages your real estate, for example, your property insurance steps in to pay you or facilitate the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is usually a tedious, lengthy affair – and time spent waiting in some cases increases the damage to the policyholder – insurance firms usually 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 expense.
Can You Give an Example?
You go to the doctor's office with a sliced-open finger. You give the nurse your health insurance card and she writes down your plan details. You get stitches and your insurance company gets an invoice for the expenses. But the next afternoon, when you clock in at your place of employment – where the injury occurred – your boss hands you workers compensation paperwork to turn in. Your employer's workers comp policy is actually responsible for the hospital trip, not your health insurance policy. It has a vested interest in getting that money back somehow.
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 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 done to your person or property. But under subrogation law, your insurance company is considered to have some of your rights in exchange for having taken care of the damages. It can go after the money that was originally due to you, because it has covered the amount already.
Why Do I Need to Know This?
For starters, 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 have a stake in the outcome as well – to the tune of $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to recover its expenses by upping your premiums. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is acting both in its own interests and in yours. 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 culpable), you'll typically get $500 back, depending on your state laws.
In addition, if the total cost 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 lawyers in immigration Herriman UT, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurance companies are not the same. When comparing, it's worth examining the reputations of competing firms to find out if they pursue winnable subrogation claims; if they resolve those claims without dragging their feet; 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 deductible 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 protecting its income by raising your premiums, you'll feel the sting later.