Subrogation is a term that's well-known among insurance and legal companies but sometimes not by the people they represent. Rather than leave it to the professionals, it is to your advantage to comprehend the steps of the process. The more knowledgeable you are, the better decisions you can make with regard to your insurance company.
Any insurance policy you own is an assurance that, if something bad happens to you, the company that insures the policy will make restitutions in a timely fashion. If you get injured on the job, for instance, your employer's workers compensation 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 regularly a time-consuming affair – and delay in some cases compounds the damage to the policyholder – insurance companies usually decide to pay up front and figure out the blame after the fact. They then need a mechanism to regain the costs if, ultimately, they weren't in charge of the expense.
Can You Give an Example?
You rush into the emergency room with a gouged finger. You give the receptionist your health insurance card and he takes down your coverage details. You get taken care of and your insurance company gets a bill for the medical care. But on the following afternoon, when you get to work – where the injury happened – you are given workers compensation forms to file. Your employer's workers comp policy is in fact responsible for the payout, not your health insurance. The latter has an interest in recovering its costs 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 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 self or property. But under subrogation law, your insurance company is considered to have some of your rights for making good on 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 one thing, 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 be precise, $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to get back its costs by ballooning your premiums and call it a day. On the other hand, if it has a competent legal team and goes after them efficiently, it is acting both in its own interests and in yours. If all is recovered, you will get your full $1,000 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, based on the laws in most states.
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 insurance dispute attorneys Tacoma, WA, pursue subrogation and wins, it will recover your costs in addition to its own.
All insurance agencies are not created equal. When comparing, it's worth examining the reputations of competing agencies to determine whether they pursue winnable subrogation claims; if they do so quickly; if they keep their accountholders updated as the case continues; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, on the other hand, an insurance agency has a record of honoring claims that aren't its responsibility and then covering its profitability by raising your premiums, you'll feel the sting later.