Subrogation is a term that's well-known in legal and insurance circles but often not by the customers they represent. Even if it sounds complicated, it is in your self-interest to comprehend an overview of how it works. The more information you have about it, the better decisions you can make with regard to your insurance policy.
Any insurance policy you hold is a commitment that, if something bad occurs, the firm on the other end of the policy will make good without unreasonable delay. If you get injured while you're on the clock, your employer's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially accountable for services or repairs is typically a tedious, lengthy affair – and delay often compounds the damage to the victim – insurance companies often opt to pay up front and figure out the blame afterward. 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 payout.
Can You Give an Example?
You go to the doctor's office with a gouged finger. You hand the receptionist your medical insurance card and he takes down your coverage information. You get stitched up and your insurer gets an invoice for the medical care. But on the following afternoon, when you arrive at work – where the injury happened – you are given workers compensation paperwork to file. Your company's workers comp policy is in fact responsible for the hospital trip, not your medical insurance company. 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 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. Usually, only you can sue for damages to your self or property. But under subrogation law, your insurer 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 Individuals?
For starters, 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 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 get back its expenses by raising your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and pursues them aggressively, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent to blame), you'll typically get $500 back, based on the laws in most states.
Furthermore, if the total expense of an accident is more than 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 lawyer Bonney Lake WA, pursue subrogation and wins, it will recover your costs in addition to its own.
All insurance agencies are not created equal. When shopping around, it's worth comparing the reputations of competing agencies to evaluate if they pursue legitimate subrogation claims; if they do so without delay; if they keep their accountholders advised 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 firm has a reputation of honoring claims that aren't its responsibility and then protecting its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.