Subrogation is an idea that's well-known among insurance and legal firms but often not by the customers who employ them. Even if it sounds complicated, it would be to your advantage to know an overview of the process. The more you know, the more likely it is that an insurance lawsuit will work out favorably.
Every insurance policy you own is a commitment that, if something bad occurs, the company on the other end of the policy will make restitutions in a timely fashion. If your vehicle is in a fender-bender, insurance adjusters (and the judicial system, when necessary) determine who was at fault and that party's insurance covers the damages.
But since ascertaining who is financially responsible for services or repairs is sometimes a heavily involved affair – and delay often adds to the damage to the policyholder – insurance companies in many cases opt to pay up front and figure out the blame afterward. They then need a way to recover the costs if, when all is said and done, they weren't responsible for the payout.
Let's Look at an Example
You arrive at the Instacare with a sliced-open finger. You give the nurse your medical insurance card and she writes down your coverage details. You get stitches and your insurance company is billed for the tab. But on the following morning, when you get to work – where the accident happened – you are given workers compensation paperwork to fill out. Your company's workers comp policy is in fact responsible for the hospital visit, not your medical insurance company. It has a vested interest in getting that money back in some way.
How Does Subrogation Work?
This is where subrogation comes in. It is the method that an insurance company uses to claim payment 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. Usually, only you can sue for damages to your self 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.
How Does This Affect Me?
For starters, 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 – to be precise, $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to recover its losses by upping your premiums and call it a day. On the other hand, if it has a capable legal team and pursues those cases aggressively, it is acting both in its own interests and in yours. If all $10,000 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 culpable), you'll typically get half your deductible back, depending on your state laws.
Furthermore, if the total price of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as child support lawyer 23294, pursue subrogation and wins, it will recover your losses as well as its own.
All insurance agencies are not created equal. When shopping around, it's worth looking up the reputations of competing agencies to determine if they pursue winnable subrogation claims; if they resolve those claims with some expediency; if they keep their policyholders posted as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, on the other hand, an insurer has a reputation of honoring claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you should keep looking.