Subrogation is an idea that's well-known among insurance and legal firms but sometimes not by the people they represent. Even if it sounds complicated, it is in your self-interest to know an overview of the process. The more knowledgeable you are, the better decisions you can make with regard to your insurance policy.
Every insurance policy you have is a promise that, if something bad occurs, the company on the other end of the policy will make good in one way or another in a timely manner. If you get hurt on the job, your employer's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially responsible for services or repairs is regularly a confusing affair – and time spent waiting often increases the damage to the policyholder – insurance firms often decide to pay up front and figure out the blame after the fact. They then need a method to get back the costs if, when all the facts are laid out, they weren't responsible for the expense.
Let's Look at an Example
You head to the Instacare with a deeply cut finger. You give the receptionist your medical insurance card and she writes down your coverage information. You get stitches and your insurance company is billed for the expenses. But the next afternoon, when you clock in at work – where the injury happened – you are given workers compensation forms to turn in. Your employer's workers comp policy is in fact responsible for the costs, not your medical 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 way that an insurance company uses to claim reimbursement after it has paid for something that should have been paid by some other entity. Some companies 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 to your person or property. But under subrogation law, your insurance company is extended 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.
How Does This Affect the Insured?
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 timid on any subrogation case it might not win, it might choose to recover its expenses by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is acting both in its own interests and in yours. If all ten grand 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 responsible), you'll typically get $500 back, depending on the laws in your state.
Moreover, if the total expense of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as immigration law Herriman UT, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurers are not created equal. When comparing, it's worth looking at the records of competing firms to evaluate if they pursue legitimate subrogation claims; if they do so quickly; if they keep their clients apprised as the case proceeds; 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 covering its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.