Subrogation is a concept that's understood among legal and insurance companies but sometimes not by the people who employ them. Even if you've never heard the word before, it would be in your benefit to comprehend the steps of the process. The more you know about it, the better decisions you can make with regard to your insurance policy.
An insurance policy you have is a promise that, if something bad occurs, the company on the other end of the policy will make good in one way or another in a timely fashion. If your vehicle is rear-ended, insurance adjusters (and police, when necessary) determine who was to blame and that party's insurance covers the damages.
But since figuring out who is financially accountable for services or repairs is regularly a time-consuming affair – and time spent waiting often increases the damage to the victim – insurance companies usually decide to pay up front and figure out the blame later. They then need a method to recover the costs if, when all the facts are laid out, they weren't actually responsible for the expense.
For Example
You head to the Instacare with a sliced-open finger. You give the nurse your medical insurance card and he takes down your plan details. You get stitches and your insurer is billed for the expenses. But on the following afternoon, when you clock in at your workplace – where the injury happened – your boss hands you workers compensation forms to file. Your employer's workers comp policy is actually responsible for the hospital visit, not your medical insurance. 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 reimbursement 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. Normally, only you can sue for damages to your person or property. But under subrogation law, your insurer is considered to have some of your rights 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 Should I Care?
For one thing, 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 – namely, $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to recoup its losses by raising your premiums. On the other hand, if it has a competent legal team and goes after those cases aggressively, it is acting both in its own interests and in yours. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent accountable), you'll typically get half your deductible back, based on the laws in most states.
Moreover, if the total cost 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 immigration defense attorney South Jordon UT, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurance agencies are not created equal. When shopping around, it's worth looking at the records of competing firms to determine if they pursue winnable subrogation claims; if they do so with some expediency; if they keep their accountholders posted as the case goes on; 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 insurance agency has a record of paying out claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.