Subrogation and How It Affects Policyholders

Subrogation is an idea that's well-known in insurance and legal circles but sometimes not by the people who employ them. Even if it sounds complicated, it would be in your self-interest to comprehend the steps of the process. The more knowledgeable you are, the better decisions you can make with regard to your insurance policy.

Any 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 you get hurt at work, for instance, your employer's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.

But since determining who is financially responsible for services or repairs is regularly a time-consuming affair – and delay sometimes compounds the damage to the policyholder – insurance firms in many cases decide to pay up front and figure out the blame after the fact. They then need a means to regain the costs if, when all is said and done, they weren't responsible for the payout.

Let's Look at an Example

You rush into the doctor's office with a sliced-open finger. You give the receptionist your health insurance card and she records your policy details. You get taken care of and your insurer is billed for the expenses. But the next morning, when you arrive at your place of employment – where the injury occurred – your boss hands you workers compensation forms to fill out. Your employer's workers comp policy is in fact responsible for the hospital trip, not your health insurance. The latter has a right to recover its money in some way.

How Does Subrogation Work?

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 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 done to your person or property. But under subrogation law, your insurer is given some of your rights in exchange for making good on the damages. It can go after the money that was originally due to you, because it has covered the amount already.

Why Do I Need to Know This?

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 lost some money too – to the tune of $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its expenses by increasing your premiums. On the other hand, if it has a competent legal team and pursues them aggressively, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full thousand-dollar 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, depending on the laws in your state.

Additionally, if the total cost 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 employment law payson ut, pursue subrogation and succeeds, it will recover your expenses in addition to its own.

All insurers are not created equal. When comparing, it's worth looking up the records of competing agencies to evaluate if they pursue winnable subrogation claims; if they resolve those claims quickly; if they keep their clients updated as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your losses 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 safeguarding its profitability by raising your premiums, you'll feel the sting later.