- 7 24, 2019
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Subrogation is a concept that's understood among legal and insurance firms but rarely by the policyholders who employ them. Even if it sounds complicated, it would be in your benefit to comprehend the steps of the process. The more you know about it, the better decisions you can make with regard to your insurance policy.
An insurance policy you hold is an assurance that, if something bad happens to you, the firm on the other end of the policy will make restitutions in a timely fashion. If your vehicle is in a fender-bender, insurance adjusters (and police, when necessary) determine who was to blame and that person's insurance covers the damages.
But since determining who is financially responsible for services or repairs is often a tedious, lengthy affair – and time spent waiting often adds to the damage to the policyholder – insurance companies often opt to pay up front and assign blame afterward. They then need a mechanism to get back the costs if, when all the facts are laid out, they weren't in charge of the payout.
Let's Look at an Example
You head to the emergency room with a gouged finger. You give the nurse your health insurance card and he takes down your coverage details. You get stitched up and your insurance company is billed for the medical care. But on the following day, when you get to your workplace – where the accident occurred – you are given workers compensation forms to turn in. Your workers comp policy is actually responsible for the expenses, not your health insurance policy. The latter has a right to recover its money somehow.
How Subrogation Works
This is where subrogation comes in. It is the way 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 to your person or property. But under subrogation law, your insurance company 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 your insurance policy stipulated a deductible, it wasn't just your insurance company 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 timid on any subrogation case it might not win, it might opt to recover its expenses by boosting your premiums. On the other hand, if it has a competent legal team and goes after them enthusiastically, it is acting both in its own interests and in yours. 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 at fault), you'll typically get $500 back, depending on your state laws.
In addition, if the total cost of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as work accident attorney Whitewater, WI, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurance agencies are not the same. When comparing, it's worth looking at the reputations of competing firms to find out whether they pursue valid subrogation claims; if they do so quickly; if they keep their policyholders apprised as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, on the other hand, an insurer has a reputation of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, you'll feel the sting later.