Subrogation is a concept that's understood in legal and insurance circles but rarely by the customers who hire them. Even if you've never heard the word before, it would be in your self-interest to comprehend the nuances of the process. The more knowledgeable you are, the more likely relevant proceedings will work out in your favor.
An insurance policy you hold is a commitment that, if something bad happens to you, the insurer of the policy will make good in one way or another without unreasonable delay. If your house is burglarized, for instance, your property insurance agrees to compensate you or pay for the repairs, subject to state property damage laws.
But since determining who is financially accountable for services or repairs is usually a time-consuming affair – and delay in some cases increases the damage to the policyholder – insurance companies often decide to pay up front and figure out the blame later. They then need a method to recover the costs if, when all is said and done, they weren't in charge of the expense.
Can You Give an Example?
You go to the Instacare with a gouged finger. You give the receptionist your medical insurance card and he records your plan information. You get taken care of and your insurer gets an invoice for the expenses. But on the following morning, when you get to your place of employment – where the injury happened – you are given workers compensation forms to file. Your employer's workers comp policy is actually responsible for the expenses, not your medical insurance. The latter has an interest in recovering its money in some way.
How Does Subrogation Work?
This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement 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. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurer is considered to have some of your rights in exchange for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Does This Matter to Me?
For a start, if you have a deductible, it wasn't just your insurer 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 timid on any subrogation case it might not win, it might choose to get back its losses by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them efficiently, it is acting both in its own interests and in yours. If all of the money 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 responsible), you'll typically get $500 back, based on the laws in most states.
Moreover, if the total cost of an accident is more than 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 claims disputes Tacoma, WA, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance agencies are not created equal. When comparing, it's worth scrutinizing the reputations of competing firms to determine whether they pursue winnable subrogation claims; if they do so without dragging their feet; if they keep their policyholders updated as the case continues; 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 agency has a reputation of honoring claims that aren't its responsibility and then covering its income by raising your premiums, even attractive rates won't outweigh the eventual headache.