Subrogation is a term that's understood in insurance and legal circles but often not by the policyholders they represent. Even if it sounds complicated, it is to your advantage to know an overview of how it works. The more you know, the better decisions you can make with regard to your insurance policy.
An insurance policy you hold is a commitment that, if something bad occurs, the firm on the other end of the policy will make good in one way or another in a timely manner. If you get injured on the job, your company's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially accountable for services or repairs is usually a confusing affair – and time spent waiting in some cases compounds the damage to the policyholder – insurance firms in many cases decide to pay up front and figure out the blame after the fact. They then need a mechanism to recover the costs if, when there is time to look at all the facts, they weren't responsible for the expense.
For Example
You are in a car accident. Another car collided with yours. Police are called, you exchange insurance information, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later police tell the insurance companies that the other driver was entirely to blame and his insurance policy should have paid for the repair of your car. How does your insurance company get its funds back?
How Subrogation Works
This is where subrogation comes in. It is the way 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. Under ordinary circumstances, only you can sue for damages to your self or property. But under subrogation law, your insurance company is extended some of your rights for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect the Insured?
For a start, if your insurance policy stipulated a deductible, it wasn't just your insurance company 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 insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its costs by upping your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and goes after them enthusiastically, it is doing you a favor as well as itself. If all of the money is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent responsible), you'll typically get half your deductible back, depending on your state laws.
Furthermore, if the total price of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as workers compensation law Paddock Lake, WI, pursue subrogation and wins, it will recover your expenses as well as its own.
All insurance companies are not the same. When comparing, it's worth contrasting the records of competing agencies to find out if they pursue winnable subrogation claims; if they do so with some expediency; if they keep their policyholders informed as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, instead, 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, you should keep looking.