Subrogation is a concept that's well-known in insurance and legal circles but rarely by the customers who employ them. Even if it sounds complicated, it is to your advantage to know the nuances of the process. The more knowledgeable you are about it, the better decisions you can make about your insurance company.
An insurance policy you hold is an assurance that, if something bad occurs, the insurer of the policy will make restitutions without unreasonable delay. If your house suffers fire damage, your property insurance agrees to remunerate you or enable the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is usually a confusing affair – and time spent waiting in some cases increases the damage to the policyholder – insurance firms usually opt to pay up front and assign blame later. They then need a method to regain the costs if, when all the facts are laid out, they weren't actually in charge of the expense.
You rush into the doctor's office with a deeply cut finger. You give the receptionist your medical insurance card and he writes down your coverage information. You get stitched up and your insurance company gets an invoice for the medical care. But on the following afternoon, when you get to work – where the injury occurred – your boss hands you workers compensation forms to file. Your company's workers comp policy is actually responsible for the expenses, not your medical insurance policy. The latter has an interest in recovering its money somehow.
How Subrogation Works
This is where subrogation comes in. It is the way 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. Ordinarily, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is considered to have 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 Do I Need to Know This?
For a start, if you have a deductible, it wasn't just your insurance company 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 opt to recover its expenses by upping your premiums. On the other hand, if it knows which cases it is owed and pursues them aggressively, it is acting both in its own interests and in yours. If all ten grand 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 to blame), you'll typically get $500 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 real estate law Lake Geneva, WI, 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 looking at the records of competing firms to find out if they pursue winnable subrogation claims; if they resolve those claims without delay; if they keep their clients apprised 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 company has a reputation of honoring claims that aren't its responsibility and then protecting its profitability by raising your premiums, you'll feel the sting later.