Subrogation is a term that's understood in legal and insurance circles but sometimes not by the policyholders who hire them. Even if it sounds complicated, it would be in your self-interest to understand the nuances of how it works. The more information you have, the better decisions you can make with regard to your insurance policy.
An insurance policy you have is a promise that, if something bad happens to you, the insurer of the policy will make good in one way or another in a timely manner. If you get hurt at work, your employer's workers compensation insurance pays out 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 regularly a time-consuming affair – and time spent waiting sometimes adds to the damage to the victim – insurance companies in many cases decide to pay up front and figure out the blame after the fact. They then need a means to recover the costs if, when all the facts are laid out, they weren't in charge of the payout.
Can You Give an Example?
You arrive at the emergency room with a gouged finger. You hand the receptionist your medical insurance card and he records your plan information. You get stitches and your insurer gets a bill for the medical care. But on the following afternoon, when you clock in at your place of employment – where the accident occurred – you are given workers compensation paperwork to turn in. Your workers comp policy is in fact responsible for the expenses, not your medical insurance company. It has a vested interest in getting that money back somehow.
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 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 to your person or property. But under subrogation law, your insurer is given 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.
How Does This Affect the Insured?
For starters, if your insurance policy stipulated a deductible, it wasn't just your insurer 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 lax about bringing subrogation cases to court, it might choose to recoup its losses by upping your premiums. On the other hand, if it knows which cases it is owed and pursues those cases aggressively, 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 one-half responsible), you'll typically get $500 back, based on the laws in most states.
Additionally, if the total expense of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as legal assistance payson ut, pursue subrogation and wins, it will recover your costs as well as its own.
All insurers are not the same. When shopping around, it's worth looking at the reputations of competing agencies to determine if they pursue valid subrogation claims; if they do so without delay; if they keep their accountholders advised as the case continues; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, instead, an insurer has a record of paying out claims that aren't its responsibility and then covering its income by raising your premiums, you'll feel the sting later.