Subrogation is a term that's well-known among insurance and legal firms but often not by the people who hire them. Even if you've never heard the word before, it would be in your benefit to understand the nuances of the process. The more information you have, the better decisions you can make about your insurance company.
Every insurance policy you have is a commitment that, if something bad occurs, the company on the other end of the policy will make good in a timely fashion. If you get hurt while you're on the clock, your company's workers compensation 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 confusing affair – and time spent waiting in some cases 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 mechanism to get back the costs if, when all the facts are laid out, they weren't actually in charge of the payout.
Can You Give an Example?
You rush into the doctor's office with a gouged finger. You give the receptionist your medical insurance card and he records your policy details. You get taken care of and your insurance company gets a bill for the services. But the next day, when you clock in at your place of employment – where the injury occurred – you are given workers compensation paperwork to turn in. Your workers comp policy is actually responsible for the expenses, not your medical insurance policy. The latter has a right to recover its money somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement 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. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurance company 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 Policyholders?
For starters, if you have 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 lost some money too – to the tune of $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its losses by increasing your premiums. 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 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half responsible), you'll typically get half your deductible back, depending on the laws in your state.
Additionally, 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 criminal law defense lawyer Portland OR, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurers are not created equal. When shopping around, it's worth weighing the records of competing companies to find out whether they pursue legitimate subrogation claims; if they do so quickly; if they keep their accountholders apprised as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, instead, an insurer has a reputation of paying out claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you should keep looking.