Subrogation and How It Affects Policyholders
Subrogation is a term that's well-known in legal and insurance circles but rarely by the policyholders who hire them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is to your advantage to comprehend the steps of the process. The more you know about it, the more likely an insurance lawsuit will work out favorably.
Every insurance policy you hold is a promise that, if something bad occurs, the business on the other end of the policy will make good in one way or another in a timely manner. If you get an injury at work, your company's workers compensation insurance pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially responsible for services or repairs is usually a confusing affair – and delay often adds to the damage to the policyholder – insurance companies usually decide to pay up front and figure out the blame afterward. They then need a way to regain the costs if, ultimately, they weren't in charge of the payout.
Let's Look at an Example
You go to the Instacare with a gouged finger. You hand the nurse your health insurance card and she takes down your coverage details. You get stitches and your insurance company gets a bill for the services. But on the following day, when you arrive at your workplace – where the injury happened – you are given workers compensation paperwork to fill out. Your company's workers comp policy is in fact responsible for the costs, not your health insurance policy. The latter has a right to recover its costs somehow.
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. Ordinarily, only you can sue for damages to your person or property. But under subrogation law, your insurance company is given 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 a start, if your insurance policy stipulated 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 insurance company is timid on any subrogation case it might not win, it might opt to recover its expenses by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases aggressively, it is doing you a favor as well as itself. If all is recovered, you will get your full 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, based on the laws in most states.
Furthermore, if the total price of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as immigration law firm Magna Ut, pursue subrogation and succeeds, it will recover your expenses in addition to its own.
All insurers are not the same. When comparing, it's worth looking at the records of competing companies to find out whether they pursue legitimate subrogation claims; if they resolve those claims with some expediency; if they keep their customers informed 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 firm has a reputation of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, you'll feel the sting later.