Subrogation is a concept that's understood in insurance and legal circles but often not by the people they represent. Even if you've never heard the word before, it would be in your benefit to comprehend the steps of how it works. The more knowledgeable you are about it, 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 business on the other end of the policy will make good in one way or another in a timely fashion. If your vehicle is in a fender-bender, insurance adjusters (and the judicial system, when necessary) decide who was at fault and that party's insurance covers the damages.
But since ascertaining who is financially accountable for services or repairs is typically a confusing affair – and delay in some cases increases the damage to the policyholder – insurance companies often opt to pay up front and figure out the blame later. They then need a method to get back the costs if, when there is time to look at all the facts, they weren't actually in charge of the expense.
Let's Look at an Example
You arrive at the doctor's office with a gouged finger. You give the nurse your medical insurance card and she records your policy information. You get stitched up and your insurance company is billed for the tab. But the next day, when you get to work – where the accident occurred – your boss hands you workers compensation paperwork to file. Your workers comp policy is in fact responsible for the bill, not your medical 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 process that an insurance company uses to claim payment 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. Ordinarily, only you can sue for damages to your self 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.
Why Should I Care?
For one thing, if your insurance policy stipulated 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 the tune of $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recoup its losses by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases efficiently, it is acting both in its own interests and in yours. If all is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent accountable), you'll typically get $500 back, depending on the laws in your state.
Furthermore, if the total expense of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as criminal defense law Pleasant Grove UT, pursue subrogation and succeeds, it will recover your losses in addition to its own.
All insurers are not created equal. When comparing, it's worth weighing the records of competing companies to find out if they pursue winnable subrogation claims; if they do so without dragging their feet; if they keep their policyholders apprised as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your money 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 covering its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.