Subrogation is a concept that's well-known in insurance and legal circles but sometimes not by the policyholders who employ them. Even if you've never heard the word before, it would be in your benefit to know an overview of the process. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance policy.
Every insurance policy you hold is an assurance that, if something bad happens to you, the business on the other end of the policy will make good in a timely fashion. If your vehicle is rear-ended, insurance adjusters (and police, when necessary) determine who was to blame and that person's insurance pays out.
But since figuring out who is financially responsible for services or repairs is typically a heavily involved affair – and time spent waiting sometimes adds to the damage to the victim – insurance companies usually opt to pay up front and figure out the blame afterward. They then need a path to recover the costs if, when there is time to look at all the facts, they weren't responsible for the expense.
Let's Look at an Example
You head to the emergency room with a gouged finger. You hand the nurse your medical insurance card and she records your coverage details. You get stitches and your insurer gets an invoice for the services. But the next afternoon, when you arrive at your place of employment – where the accident happened – you are given workers compensation paperwork to file. Your employer's workers comp policy is actually responsible for the bill, not your medical insurance company. The latter has an interest in recovering its costs 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 for having taken care of 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 starters, if your insurance policy stipulated a deductible, your insurer wasn't the only one 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 insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its costs by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is doing you a favor as well as itself. If all 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 at fault), you'll typically get $500 back, based on the laws in most states.
Furthermore, if the total expense 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 criminal defense lawyer near me, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurers are not the same. When shopping around, it's worth looking up the reputations of competing agencies to find out if they pursue winnable subrogation claims; if they resolve those claims without delay; if they keep their accountholders posted as the case proceeds; 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 firm has a reputation of paying out claims that aren't its responsibility and then covering its income by raising your premiums, you should keep looking.