Subrogation is a term that's understood among legal and insurance professionals but rarely by the customers they represent. Even if it sounds complicated, it would be in your self-interest to know the steps of the process. The more you know about it, the more likely an insurance lawsuit will work out favorably.
An insurance policy you hold is a promise that, if something bad happens to you, the firm that covers the policy will make good in a timely fashion. If your property burns down, your property insurance agrees to pay you or pay for the repairs, subject to state property damage laws.
But since figuring out who is financially responsible for services or repairs is usually a confusing affair – and delay sometimes compounds the damage to the victim – insurance firms usually opt to pay up front and figure out the blame afterward. They then need a means to recover the costs if, when all is said and done, they weren't in charge of the payout.
Let's Look at an Example
You arrive at the hospital with a deeply cut finger. You give the receptionist your medical insurance card and he records your policy details. You get taken care of and your insurance company gets an invoice for the medical care. But the next afternoon, when you arrive at your workplace – where the injury occurred – your boss hands you workers compensation paperwork to turn in. Your workers comp policy is in fact responsible for the invoice, not your medical insurance. 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 method that an insurance company uses to claim payment 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. Ordinarily, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is extended some of your rights for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Policyholders?
For starters, if you have a deductible, it wasn't just your insurance company 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 recover its costs by upping your premiums. On the other hand, if it has a knowledgeable legal team and pursues them enthusiastically, it is acting both in its own interests and in yours. 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 responsible), you'll typically get half your deductible back, based on the laws in most states.
Furthermore, if the total price 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 auto accident injury lawyer pasadena, md, pursue subrogation and succeeds, it will recover your losses in addition to its own.
All insurance companies are not created equal. When comparing, it's worth looking up the records of competing companies to evaluate whether they pursue legitimate subrogation claims; if they resolve those claims without delay; if they keep their policyholders informed as the case continues; and if they then process successfully won reimbursements right away so that you can get your losses back and move on with your life. If, instead, an insurer has a record of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you'll feel the sting later.