Subrogation is a concept that's understood among legal and insurance professionals but sometimes not by the customers they represent. Rather than leave it to the professionals, it is to your advantage to comprehend the nuances of how it works. The more information you have about it, the better decisions you can make with regard to your insurance policy.
Every insurance policy you hold is an assurance that, if something bad occurs, the insurer of the policy will make good in a timely fashion. If a storm damages your real estate, for instance, your property insurance steps in to repay you or facilitate the repairs, subject to state property damage laws.
But since determining who is financially accountable for services or repairs is often a confusing affair – and time spent waiting sometimes adds to the damage to the victim – insurance companies usually decide to pay up front and assign blame later. They then need a way to recoup the costs if, when all the facts are laid out, they weren't actually responsible for the payout.
You go to the emergency room with a sliced-open finger. You give the receptionist your medical insurance card and she takes down your plan information. You get stitched up and your insurance company gets a bill for the medical care. But the next morning, when you clock in at your workplace – where the injury occurred – you are given workers compensation paperwork to file. Your workers comp policy is actually responsible for the payout, not your medical insurance. The latter has a right to recover its money somehow.
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim payment 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 done to your self or property. But under subrogation law, your insurance company is given 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.
Why Should I Care?
For one thing, 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 – to the tune of $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to recoup its expenses by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them aggressively, it is acting both in its own interests and in yours. If all is recovered, you will get your full thousand-dollar 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, depending on your state laws.
Additionally, if the total cost 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 lawyer office payson ut, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurance agencies are not the same. When shopping around, it's worth examining the reputations of competing agencies to evaluate whether they pursue legitimate subrogation claims; if they resolve those claims without dragging their feet; if they keep their policyholders posted as the case continues; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, instead, an insurance company has a reputation of honoring 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.