Subrogation is an idea that's understood in insurance and legal circles but rarely by the policyholders they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your self-interest to understand the steps of the process. The more you know, the better decisions you can make about your insurance policy.
An insurance policy you hold is an assurance that, if something bad occurs, the company that covers the policy will make restitutions in a timely manner. If you get injured at work, for instance, your employer's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially responsible for services or repairs is usually a confusing affair – and delay in some cases increases the damage to the victim – insurance companies often opt to pay up front and figure out the blame after the fact. They then need a path to regain the costs if, ultimately, they weren't actually responsible for the payout.
Can You Give an Example?
You go to the Instacare with a deeply cut finger. You hand the receptionist your health insurance card and he records your coverage details. You get stitches and your insurance company gets a bill for the medical care. But the next morning, when you arrive at your workplace – where the accident happened – your boss hands you workers compensation forms to fill out. Your employer's workers comp policy is in fact responsible for the costs, not your health insurance policy. 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 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 to your self or property. But under subrogation law, your insurance company is considered to have 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.
How Does This Affect Individuals?
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 have a stake in the outcome as well – namely, $1,000. If your insurance company 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 knowledgeable legal team and goes after them aggressively, 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 one-half culpable), you'll typically get half your deductible back, depending on the laws in your state.
Moreover, if the total price of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as family law attorney Olympia, WA, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurers are not created equal. When comparing, it's worth comparing the reputations of competing firms to find out if they pursue valid subrogation claims; if they do so quickly; if they keep their accountholders updated as the case continues; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, instead, an insurance company has a reputation of honoring claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.