Subrogation is an idea that's well-known in insurance and legal circles but sometimes not by the customers they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your self-interest to understand an overview of the process. The more information you have, the more likely relevant proceedings will work out favorably.
Any insurance policy you own is an assurance that, if something bad occurs, the insurer of the policy will make restitutions without unreasonable delay. If your real estate burns down, your property insurance steps in to remunerate you or facilitate the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is regularly a time-consuming affair – and time spent waiting sometimes compounds the damage to the victim – insurance firms in many cases opt to pay up front and assign blame later. They then need a means to recoup the costs if, when all is said and done, they weren't actually responsible for the payout.
Can You Give an Example?
You rush into the emergency room with a gouged finger. You hand the receptionist your medical insurance card and she records your policy information. You get stitched up and your insurer gets a bill for the expenses. But the next day, when you get to your place of employment – where the accident occurred – your boss hands you workers compensation paperwork to file. Your workers comp policy is actually responsible for the payout, not your medical insurance policy. 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 process 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 person or property. But under subrogation law, your insurer is extended 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.
Why Do I Need to Know This?
For a start, if your insurance policy stipulated a deductible, it wasn't just your insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to the tune of $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to recover its costs by increasing your premiums and call it a day. On the other hand, if it has a capable legal team and goes after them enthusiastically, it is acting both in its own interests and in yours. If all 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 accountable), you'll typically get $500 back, based on the laws in most states.
Moreover, 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 spendy. If your insurance company or its property damage lawyers, such as insurance claim lawyers Tacoma, WA, pursue subrogation and succeeds, it will recover your expenses as well as its own.
All insurers are not created equal. When comparing, it's worth weighing the reputations of competing companies to evaluate whether they pursue legitimate subrogation claims; if they do so quickly; if they keep their clients informed as the case goes on; and if they then process successfully won reimbursements right away so that you can get your losses back and move on with your life. If, on the other hand, an insurer has a record of honoring claims that aren't its responsibility and then protecting its profitability by raising your premiums, you'll feel the sting later.