Subrogation is an idea that's well-known in legal and insurance circles but rarely by the customers who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your benefit to know an overview of the process. The more you know, the better decisions you can make with regard to your insurance policy.
Every insurance policy you own is a promise that, if something bad occurs, the company on the other end of the policy will make restitutions in a timely manner. If your house is burglarized, for example, your property insurance steps in to remunerate you or enable the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is typically a tedious, lengthy affair – and time spent waiting often compounds the damage to the policyholder – insurance companies usually decide to pay up front and assign blame later. They then need a method to recover the costs if, once the situation is fully assessed, they weren't actually in charge of the payout.
You rush into the doctor's office with a gouged finger. You hand the nurse your health insurance card and he takes down your policy details. You get taken care of and your insurer gets a bill for the tab. But the next day, when you get to work – where the injury occurred – your boss hands you workers compensation forms to file. Your company's workers comp policy is in fact responsible for the payout, not your health insurance. The latter has an interest in recovering its money in some way.
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 done to your self or property. But under subrogation law, your insurer is given 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.
Why Does This Matter to Me?
For one thing, if you have a deductible, your insurer wasn't the only one 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 lax about bringing subrogation cases to court, it might choose to get back its costs by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases enthusiastically, it is doing you a favor as well as itself. If all of the money is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent accountable), you'll typically get half your deductible back, depending on your state laws.
In addition, if the total price 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 auto accident attorney pasadena md, pursue subrogation and succeeds, it will recover your costs as well as its own.
All insurers are not the same. When comparing, it's worth measuring the records of competing firms to determine whether they pursue legitimate subrogation claims; if they resolve those claims quickly; if they keep their customers apprised as the case continues; and if they then process successfully won reimbursements quickly 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 covering its income by raising your premiums, even attractive rates won't outweigh the eventual headache.