Subrogation is a term that's understood among insurance and legal firms but sometimes not by the policyholders who employ them. Even if it sounds complicated, it is in your benefit to understand an overview of how it works. The more you know about it, the more likely an insurance lawsuit will work out favorably.
An insurance policy you own is an assurance that, if something bad occurs, the company on the other end of the policy will make good in a timely fashion. If your vehicle is hit, insurance adjusters (and the courts, when necessary) decide who was to blame and that person's insurance covers the damages.
But since ascertaining who is financially accountable for services or repairs is regularly a time-consuming affair – and time spent waiting often increases the damage to the policyholder – insurance firms often opt to pay up front and assign blame afterward. They then need a mechanism to recoup the costs if, when there is time to look at all the facts, they weren't responsible for the payout.
Can You Give an Example?
You go to the doctor's office with a gouged finger. You hand the receptionist your health insurance card and he takes down your plan details. You get stitches and your insurer gets a bill for the medical care. But on the following afternoon, when you clock in at your place of employment – where the injury occurred – your boss hands you workers compensation paperwork to file. Your workers comp policy is in fact responsible for the bill, not your health insurance company. The latter has a right to recover its costs somehow.
How Subrogation Works
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 to your self or property. But under subrogation law, your insurer is given some of your rights 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 one thing, if you have a deductible, your insurer wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its expenses by upping your premiums and call it a day. On the other hand, if it has a capable legal team and goes after them efficiently, it is doing you a favor as well as itself. 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 $500 back, based on the laws in most states.
In addition, if the total expense of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as family law lawyers near me Salt Lake City UT, pursue subrogation and succeeds, it will recover your losses in addition to its own.
All insurers are not created equal. When comparing, it's worth researching the reputations of competing companies to find out if they pursue winnable subrogation claims; if they do so without delay; if they keep their accountholders updated as the case continues; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, on the other hand, an insurer 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.