Subrogation is a concept that's well-known in insurance and legal circles but often not by the customers they represent. Even if it sounds complicated, it is in your self-interest to understand the nuances of how it works. The more information you have, the better decisions you can make about your insurance company.
Every insurance policy you own is an assurance that, if something bad happens to you, the company on the other end of the policy will make restitutions without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and the judicial system, when necessary) determine who was at fault and that person's insurance pays out.
But since determining who is financially accountable for services or repairs is regularly a heavily involved affair – and delay in some cases adds to the damage to the policyholder – insurance firms in many cases opt to pay up front and figure out the blame later. They then need a method to get back the costs if, when there is time to look at all the facts, they weren't in charge of the expense.
Let's Look at an Example
You rush into the doctor's office with a sliced-open finger. You give the nurse your health insurance card and she records your policy information. You get stitched up and your insurance company is billed for the medical care. But on the following afternoon, when you arrive at your place of employment – where the accident happened – you are given workers compensation paperwork to turn in. Your employer's workers comp policy is in fact responsible for the hospital trip, not your health insurance company. The latter has an interest in recovering its costs in some way.
How Does Subrogation Work?
This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. Some companies 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 done to your person or property. But under subrogation law, your insurance company is given some of your rights 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 Does This Matter to Me?
For a start, if you have a deductible, your insurance company wasn't the only one 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 raising your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them aggressively, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get half your deductible back, depending on your state laws.
Moreover, if the total price of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as personal injury lawyers glen burnie, md, pursue subrogation and wins, it will recover your expenses as well as its own.
All insurance companies are not created equal. When comparing, it's worth measuring the records of competing agencies to find out if they pursue winnable subrogation claims; if they do so with some expediency; if they keep their clients updated as the case goes on; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, on the other hand, an insurance agency has a reputation of honoring claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.