- 8 2, 2017
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Subrogation is a term that's well-known in insurance and legal circles but often not by the people who employ them. Rather than leave it to the professionals, it is to your advantage to understand the nuances of the process. The more information you have, the better decisions you can make with regard to your insurance policy.
Every insurance policy you have is a commitment that, if something bad happens to you, the firm on the other end of the policy will make restitutions in one way or another in a timely fashion. If you get an injury at work, for example, your company's workers compensation pays out 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 regularly a confusing affair – and time spent waiting sometimes compounds the damage to the victim – insurance companies usually decide to pay up front and assign blame after the fact. They then need a mechanism to regain the costs if, when all is said and done, they weren't in charge of the payout.
Let's Look at an Example
You arrive at the hospital with a gouged finger. You give the receptionist your medical insurance card and he writes down your policy information. You get stitches and your insurer gets an invoice for the expenses. But the next day, when you arrive at your workplace – where the injury happened – your boss hands you workers compensation forms to file. Your workers comp policy is actually responsible for the bill, not your medical insurance. It has a vested interest in getting that money back somehow.
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. Some companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Normally, only you can sue for damages done to your person or property. But under subrogation law, your insurer is considered to have some of your rights for having taken care of the damages. It can go after the money that was originally due to you, because it has covered the amount already.
Why Do I Need to Know This?
For a start, if you have a deductible, your insurer wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its costs by raising your premiums. On the other hand, if it knows which cases it is owed and pursues those cases aggressively, it is doing you a favor as well as itself. If all is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half responsible), you'll typically get half your deductible back, depending on the laws in your state.
Moreover, if the total loss of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as lawyer 83101, 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 looking at the records of competing companies to find out whether they pursue legitimate subrogation claims; if they do so without dragging their feet; if they keep their clients 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, on the other hand, an insurer has a record of paying out claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you should keep looking.