Subrogation is a concept that's understood in insurance and legal circles but often not by the policyholders they represent. Rather than leave it to the professionals, it is in your benefit to understand the steps of the process. The more knowledgeable you are, the more likely an insurance lawsuit will work out favorably.
Any insurance policy you own is a commitment that, if something bad happens to you, the insurer of the policy will make good without unreasonable delay. If a fire damages your home, for example, your property insurance agrees to compensate you or facilitate the repairs, subject to state property damage laws.
But since figuring out who is financially responsible for services or repairs is typically a heavily involved affair – and time spent waiting sometimes increases the damage to the policyholder – insurance companies in many cases opt to pay up front and assign blame afterward. They then need a way to get back 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 sliced-open finger. You give the nurse your health insurance card and he records your coverage information. You get stitches and your insurance company gets an invoice for the medical care. But on the following afternoon, when you get to your workplace – where the accident happened – your boss hands you workers compensation paperwork to fill out. Your employer's workers comp policy is in fact responsible for the payout, not your health insurance. The latter has an interest in recovering its costs somehow.
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim payment 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. Normally, 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 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 Should I Care?
For starters, if your insurance policy stipulated a deductible, your insurance company 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 be precise, $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to recoup its costs by boosting your premiums. On the other hand, if it has a knowledgeable legal team and pursues those cases enthusiastically, 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 50 percent responsible), you'll typically get half your deductible back, based on the laws in most states.
Furthermore, if the total price of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as injury attorney glen burnie, md, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance agencies are not the same. When comparing, it's worth examining the records of competing companies to evaluate whether they pursue valid subrogation claims; if they do so without delay; if they keep their policyholders advised as the case continues; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, instead, an insurer has a record of honoring claims that aren't its responsibility and then covering its bottom line by raising your premiums, you should keep looking.