Subrogation is an idea that's understood among insurance and legal professionals but sometimes not by the customers who hire them. Even if you've never heard the word before, it would be to your advantage to understand the nuances of how it works. The more information you have, the better decisions you can make with regard to your insurance company.
Any insurance policy you have is an assurance that, if something bad occurs, the insurer of the policy will make good without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and the courts, when necessary) decide who was to blame and that person's insurance covers the damages.
But since determining who is financially responsible for services or repairs is usually a confusing affair – and delay often adds to the damage to the victim – insurance companies often decide to pay up front and figure out the blame later. They then need a way to recoup the costs if, once the situation is fully assessed, they weren't actually responsible for the payout.
Can You Give an Example?
You rush into the doctor's office with a sliced-open finger. You hand the nurse your health insurance card and she writes down your plan details. You get taken care of and your insurance company is billed for the expenses. But on the following afternoon, when you get to work – where the injury happened – you are given workers compensation forms to file. Your workers comp policy is actually responsible for the hospital trip, not your health insurance. The latter has a right to recover its money somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement 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 done to your person or property. But under subrogation law, your insurance company is given 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 Does This Matter to Me?
For one thing, if you have a deductible, your insurance company 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 – namely, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its losses by raising your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases efficiently, 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 50 percent to blame), you'll typically get half your deductible back, depending on the laws in your state.
Additionally, if the total price of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as legal assistance salem ut, successfully press a subrogation case, it will recover your losses as well as its own.
All insurers are not the same. When comparing, it's worth looking at the records of competing agencies to determine whether they pursue valid subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their clients apprised as the case continues; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, on the other hand, an insurance firm has a reputation of paying out claims that aren't its responsibility and then protecting its profit margin by raising your premiums, you should keep looking.