Subrogation is a term that's well-known among insurance and legal firms but rarely by the people they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your benefit to know the steps of how it works. The more information you have about it, the better decisions you can make about your insurance company.
Any insurance policy you own is a promise that, if something bad happens to you, the business on the other end of the policy will make good without unreasonable delay. If your house burns down, your property insurance steps in to pay you or enable the repairs, subject to state property damage laws.
But since determining who is financially accountable for services or repairs is typically a tedious, lengthy affair – and time spent waiting sometimes increases the damage to the policyholder – insurance firms usually opt to pay up front and assign blame afterward. They then need a mechanism to regain the costs if, when all is said and done, they weren't actually responsible for the expense.
Let's Look at an Example
You rush into the Instacare with a sliced-open finger. You give the receptionist your health insurance card and she writes down your policy information. You get stitches and your insurance company is billed for the medical care. But the next morning, when you arrive at your workplace – where the accident occurred – your boss hands you workers compensation paperwork to fill out. Your company's workers comp policy is in fact responsible for the invoice, not your health insurance. It has a vested interest in getting that money back somehow.
How Subrogation Works
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 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 insurance company is considered to have 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 Me?
For starters, if you have a deductible, it wasn't just your insurance company who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to recover its expenses by raising your premiums. On the other hand, if it knows which cases it is owed and goes after them 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 culpable), you'll typically get $500 back, depending on the laws in your state.
Moreover, if the total price of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as child custody lawyer Henderson Nv, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance companies are not created equal. When comparing, it's worth researching the records of competing agencies to find out if they pursue valid subrogation claims; if they resolve those claims with some expediency; if they keep their policyholders updated as the case continues; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then covering its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.