Subrogation is an idea that's well-known among legal and insurance companies but often not by the customers who hire them. Even if you've never heard the word before, it is in your self-interest to know the steps of how it works. The more you know, the better decisions you can make about your insurance policy.
Any insurance policy you have is an assurance that, if something bad happens to you, the firm that covers the policy will make good in one way or another in a timely fashion. If your vehicle is in a fender-bender, insurance adjusters (and the courts, when necessary) decide who was to blame and that party's insurance pays out.
But since figuring out who is financially accountable for services or repairs is sometimes a time-consuming affair – and time spent waiting in some cases adds to the damage to the victim – insurance companies usually opt to pay up front and figure out the blame afterward. They then need a way to recover the costs if, in the end, they weren't actually responsible for the expense.
Can You Give an Example?
You head to the hospital with a sliced-open finger. You hand the nurse your health insurance card and she takes down your plan details. You get stitched up and your insurance company gets a bill for the tab. But the next afternoon, when you clock in at your workplace – where the accident happened – you are given workers compensation paperwork to file. Your employer's workers comp policy is in fact responsible for the payout, not your health insurance policy. It has a vested interest in getting that money back in some way.
How Subrogation Works
This is where subrogation comes in. It is the process 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 given some of your rights in exchange for having taken care of 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 one thing, if you have a deductible, it wasn't just your insurance company who 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 insurer is lax about bringing subrogation cases to court, it might opt to get back its losses by ballooning 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 is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half to blame), you'll typically get half your deductible back, based on the laws in most states.
Furthermore, if the total price of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as immigration lawyer near me South Jordon UT, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurance agencies are not created equal. When comparing, it's worth comparing the records of competing agencies to determine if they pursue legitimate subrogation claims; if they resolve those claims quickly; if they keep their customers informed as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your money back and move on with your life. If, instead, an insurer has a record of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, even attractive rates won't outweigh the eventual headache.