What You Need to Know About Subrogation
Subrogation is an idea that's well-known in insurance and legal circles but rarely by the policyholders who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your self-interest to comprehend the steps of the process. The more information you have, the better decisions you can make about your insurance company.
Any insurance policy you have is a promise that, if something bad occurs, the firm on the other end of the policy will make good without unreasonable delay. If your home is burglarized, for instance, your property insurance steps in to compensate you or facilitate the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is sometimes a tedious, lengthy affair – and delay often adds to the damage to the victim – insurance companies often opt to pay up front and figure out the blame later. They then need a path to regain the costs if, once the situation is fully assessed, they weren't responsible for the payout.
Can You Give an Example?
You rush into the Instacare with a deeply cut finger. You give the receptionist your medical insurance card and she records your coverage details. You get stitched up and your insurance company gets a bill for the expenses. But on the following afternoon, when you get to your place of employment – where the accident occurred – you are given workers compensation paperwork to fill out. Your workers comp policy is actually responsible for the payout, not your medical insurance company. It has a vested interest in getting that money back somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the process 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 self or property. But under subrogation law, your insurance company is considered to have some of your rights in exchange for making good on the damages. It can go after the money that was originally due to you, because it has covered the amount already.
How Does This Affect the Insured?
For a start, 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 have a stake in the outcome as well – to the tune of $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to recoup its costs by ballooning 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 doing you a favor as well as itself. If all $10,000 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 $500 back, depending on your state laws.
Additionally, 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 employment lawyer university place wa, successfully press a subrogation case, it will recover your losses as well as its own.
All insurers are not the same. When comparing, it's worth looking up the reputations of competing agencies to determine if they pursue valid subrogation claims; if they do so with some expediency; if they keep their accountholders apprised as the case goes on; and if they then process successfully won reimbursements immediately 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 safeguarding its profitability by raising your premiums, you'll feel the sting later.