Subrogation is an idea that's well-known among legal and insurance professionals but often not by the customers who hire them. Even if you've never heard the word before, it would be to your advantage to understand the nuances of how it works. The more information you have, the better decisions you can make about your insurance company.
Any insurance policy you own is a commitment that, if something bad occurs, the firm that insures the policy will make restitutions without unreasonable delay. If your vehicle is hit, insurance adjusters (and police, when necessary) determine who was at fault and that party's insurance covers the damages.
But since determining who is financially accountable for services or repairs is usually a time-consuming affair – and delay often increases the damage to the victim – insurance firms often opt to pay up front and figure out the blame after the fact. They then need a means to recover the costs if, when all the facts are laid out, they weren't actually responsible for the payout.
Can You Give an Example?
You head to the Instacare with a sliced-open finger. You hand the receptionist your health insurance card and she writes down your coverage details. You get stitches and your insurer gets a bill for the expenses. But on the following day, when you get to your workplace – where the injury happened – your boss hands you workers compensation paperwork to fill out. Your employer's workers comp policy is actually responsible for the hospital visit, not your health insurance policy. The latter has a right to recover its costs in some way.
How Subrogation Works
This is where subrogation comes in. It is the way that an insurance company uses to claim payment 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. Usually, only you can sue for damages done to your person or property. But under subrogation law, your insurer is considered to have 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.
How Does This Affect Me?
For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurer who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recoup its losses by ballooning your premiums and call it a day. On the other hand, if it has a competent legal team and goes after them enthusiastically, it is doing you a favor as well as itself. 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 to blame), you'll typically get half your deductible back, based on the laws in most states.
Moreover, 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 attorneys olympia wa, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance companies are not the same. When comparing, it's worth looking at the reputations of competing agencies to evaluate whether they pursue winnable subrogation claims; if they resolve those claims fast; if they keep their customers apprised as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, on the other hand, an insurance company has a reputation of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you'll feel the sting later.