Subrogation is a term that's understood in legal and insurance circles but rarely by the customers they represent. Even if you've never heard the word before, it would be to your advantage to comprehend an overview of the process. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance company.
Any insurance policy you hold is a commitment that, if something bad occurs, the insurer of the policy will make restitutions in one way or another in a timely fashion. If you get an injury at work, your company's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially accountable for services or repairs is sometimes a time-consuming affair – and delay sometimes increases the damage to the policyholder – insurance companies often decide to pay up front and assign blame later. They then need a path to get back the costs if, once the situation is fully assessed, they weren't responsible for the expense.
Can You Give an Example?
You rush into the Instacare with a sliced-open finger. You hand the nurse your health insurance card and she takes down your plan details. You get stitches and your insurer gets a bill for the tab. But on the following morning, when you clock in at your workplace – where the accident occurred – you are given workers compensation forms to fill out. Your workers comp policy is in fact responsible for the costs, not your health insurance company. The latter has an interest in recovering its costs somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the process that an insurance company uses to claim payment after it has paid for something that should have been paid by some other entity. Some companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Usually, only you can sue for damages to your person or property. But under subrogation law, your insurer is extended 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.
How Does This Affect Individuals?
For a start, if your insurance policy stipulated a deductible, your insurer wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to get back its expenses by increasing your premiums. On the other hand, if it has a proficient legal team and pursues those cases enthusiastically, it is acting both in its own interests and in yours. If all ten grand is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found one-half to blame), you'll typically get $500 back, based on the laws in most states.
Furthermore, if the total expense of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as personal injury lawyer Sumner WA, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurers are not created equal. When shopping around, it's worth contrasting the reputations of competing companies to find out if they pursue valid subrogation claims; if they do so without delay; if they keep their clients posted as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, on the other hand, an insurance agency 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.