Subrogation is a term that's understood among legal and insurance professionals but often not by the policyholders they represent. Rather than leave it to the professionals, it is in your benefit to comprehend an overview of how it works. The more you know, the better decisions you can make about your insurance policy.
An insurance policy you hold is an assurance that, if something bad occurs, the company that insures the policy will make restitutions without unreasonable delay. If your home is broken into, your property insurance agrees to compensate you or enable the repairs, subject to state property damage laws.
But since determining who is financially accountable for services or repairs is sometimes a time-consuming affair – and delay often compounds the damage to the policyholder – insurance companies usually decide to pay up front and figure out the blame later. They then need a path to recoup the costs if, when there is time to look at all the facts, they weren't in charge of the expense.
You head to the doctor's office with a deeply cut finger. You hand the nurse your medical insurance card and she records your plan details. You get stitches and your insurer gets a bill for the expenses. But on the following afternoon, when you get to your workplace – where the injury happened – you are given workers compensation paperwork to turn in. Your workers comp policy is in fact responsible for the hospital trip, not your medical insurance policy. It has a vested interest in getting that money back somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement after it has paid for something that should have been paid by some other entity. 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. Under ordinary circumstances, 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.
How Does This Affect Individuals?
For starters, if you have a deductible, it wasn't just your insurer who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to be precise, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recoup its expenses by raising your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues 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 $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent culpable), you'll typically get half your deductible back, based on the laws in most states.
Furthermore, if the total loss 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 discrimination attorney lakewood wa, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurers are not created equal. When comparing, it's worth examining the records of competing companies to evaluate whether they pursue legitimate subrogation claims; if they do so quickly; if they keep their customers informed as the case continues; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, instead, an insurance agency has a record of paying out claims that aren't its responsibility and then covering its bottom line by raising your premiums, you should keep looking.