Subrogation is a concept that's understood among insurance and legal companies but rarely by the people who hire them. Even if you've never heard the word before, it would be in your self-interest to understand the steps of the process. The more knowledgeable you are about it, the more likely it is that relevant proceedings will work out favorably.
Every insurance policy you own is an assurance that, if something bad occurs, the firm that insures the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and the courts, when necessary) determine who was to blame and that party's insurance pays out.
But since figuring out who is financially accountable for services or repairs is regularly a time-consuming affair – and time spent waiting often compounds the damage to the policyholder – insurance firms in many cases opt to pay up front and figure out the blame afterward. They then need a way to recoup the costs if, in the end, they weren't responsible for the expense.
Can You Give an Example?
You go to the hospital with a gouged finger. You give the receptionist your medical insurance card and she takes down your plan details. You get stitched up and your insurer gets a bill for the services. But the next morning, when you get to your place of employment – where the injury happened – you are given workers compensation forms to file. Your company's workers comp policy is in fact responsible for the invoice, not your medical insurance policy. It has a vested interest in getting that money back in some way.
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. Some companies 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 to your person or property. But under subrogation law, your insurer is extended 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 the Insured?
For one thing, if your insurance policy stipulated a deductible, your insurer wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – namely, $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to recover its costs by raising 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 ten grand is recovered, you will get your full 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.
Additionally, if the total loss of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as personal injury attorney near me Sumner WA, pursue subrogation and succeeds, it will recover your losses in addition to its own.
All insurance companies are not the same. When shopping around, it's worth looking at the reputations of competing agencies to find out whether they pursue winnable subrogation claims; if they resolve those claims with some expediency; if they keep their accountholders informed as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, on the other hand, an insurance company has a record of paying out claims that aren't its responsibility and then protecting its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.