Subrogation is an idea that's understood in insurance and legal circles but rarely by the customers who employ them. Even if it sounds complicated, it is to your advantage to understand the nuances of how it works. The more knowledgeable you are about it, the better decisions you can make about your insurance policy.
An insurance policy you hold is an assurance that, if something bad occurs, the firm that covers the policy will make good in one way or another in a timely fashion. If a windstorm damages your home, your property insurance agrees to pay you or pay for the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is sometimes a time-consuming affair – and time spent waiting sometimes increases the damage to the victim – insurance companies usually opt to pay up front and figure out the blame afterward. They then need a path to regain 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 arrive at the Instacare with a sliced-open finger. You give the receptionist your health insurance card and she records your coverage information. You get stitched up and your insurer gets a bill for the tab. But the next morning, when you get to work – where the accident happened – you are given workers compensation paperwork to fill out. Your workers comp policy is actually responsible for the hospital visit, not your health insurance. It has a vested interest in getting that money back in some way.
How Does Subrogation Work?
This is where subrogation comes in. It is the process that an insurance company uses to claim payment after it has paid for something that should have been paid by some other entity. 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 self or property. But under subrogation law, your insurer is extended some of your rights in exchange for having taken care of 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, 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 – namely, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to recoup its expenses by boosting your premiums. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is acting both in its own interests and in yours. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent to blame), you'll typically get half your deductible back, based on the laws in most states.
Furthermore, if the total price 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 personal injury legal assistance Puyallup WA, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurers are not the same. When comparing, it's worth looking at the reputations of competing companies to find out whether they pursue legitimate subrogation claims; if they do so without dragging their feet; if they keep their accountholders informed as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, instead, an insurance firm has a reputation of honoring claims that aren't its responsibility and then protecting its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.