Subrogation is a concept that's understood in insurance and legal circles but often not by the people who hire them. Even if it sounds complicated, it is in your benefit to know the nuances of how it works. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance company.
Every insurance policy you hold is a commitment that, if something bad occurs, the insurer of the policy will make good without unreasonable delay. If you get injured while you're on the clock, for example, your company's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially accountable for services or repairs is sometimes a tedious, lengthy affair a€" and time spent waiting often adds to the damage to the policyholder a€" insurance companies usually opt to pay up front and figure out the blame later. They then need a way to recover the costs if, when all is said and done, they weren't actually responsible for the payout.
You go to the emergency room with a deeply cut finger. You hand the nurse your health insurance card and he writes down your policy information. You get stitches and your insurance company gets a bill for the tab. But on the following day, when you get to work a€" where the injury happened a€" you are given workers compensation paperwork to file. Your employer's workers comp policy is in fact responsible for the hospital trip, not your health insurance company. It has a vested interest in getting that money back in some way.
How Does Subrogation Work?
This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. 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. Usually, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is extended some of your rights in exchange for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Individuals?
For starters, if you have a deductible, your insurance company 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 a€" namely, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its costs by increasing your premiums. On the other hand, if it has a competent legal team and goes after those cases aggressively, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get half your deductible back, based on the laws in most states.
Furthermore, if the total expense 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 Divorce law pleasant grove ut, pursue subrogation and succeeds, it will recover your costs as well as its own.
All insurers are not created equal. When comparing, it's worth comparing the reputations of competing companies to find out if they pursue winnable subrogation claims; if they resolve those claims with some expediency; if they keep their accountholders advised as the case goes on; 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 insurer has a record of paying out claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you should keep looking.