Subrogation and How It Affects Policyholders
Subrogation is a term that's understood among insurance and legal professionals but rarely by the policyholders they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be 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 a promise that, if something bad occurs, the business on the other end of the policy will make restitutions without unreasonable delay. If you get injured while working, your employer's workers compensation picks up the tab 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 sometimes a heavily involved affair – and time spent waiting sometimes compounds the damage to the policyholder – insurance firms usually decide to pay up front and assign blame later. They then need a means to get back the costs if, once the situation is fully assessed, they weren't actually responsible for the expense.
Can You Give an Example?
You arrive at the Instacare with a sliced-open finger. You hand the nurse your health insurance card and he takes down your plan information. You get stitches and your insurer gets an invoice for the expenses. But the next day, when you arrive at your place of employment – where the injury happened – you are given workers compensation forms to fill out. Your company's workers comp policy is in fact responsible for the bill, 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 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 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 to your person or property. But under subrogation law, your insurer is given some of your rights 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 one thing, if your insurance policy stipulated a deductible, it wasn't just your insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to be precise, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its losses by increasing your premiums and call it a day. On the other hand, if it has a capable legal team and pursues those cases enthusiastically, 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 50 percent responsible), you'll typically get $500 back, depending on the laws in your state.
Furthermore, if the total loss of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as personal injury law firm Tacoma Wa, pursue subrogation and wins, 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 firms to find out whether they pursue legitimate subrogation claims; if they do so with some expediency; if they keep their clients posted as the case continues; and if they then process successfully won reimbursements immediately so that you can get your money back and move on with your life. If, on the other hand, an insurance agency has a record of honoring claims that aren't its responsibility and then covering its income by raising your premiums, you should keep looking.