Subrogation is a term that's well-known among insurance and legal firms 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 benefit to understand an overview of the process. The more you know, the more likely it is that relevant proceedings will work out in your favor.
An insurance policy you own is a promise that, if something bad happens to you, the firm that covers the policy will make good without unreasonable delay. If a hailstorm damages your home, your property insurance agrees to pay you or facilitate the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is sometimes a heavily involved affair – and delay sometimes compounds the damage to the policyholder – insurance firms often opt to pay up front and assign blame afterward. They then need a means to recover the costs if, when all is said and done, they weren't responsible for the expense.
You go to the hospital with a gouged finger. You give the receptionist your health insurance card and he records your policy information. You get taken care of and your insurance company gets an invoice for the services. But on the following morning, when you arrive at work – where the accident happened – you are given workers compensation forms to fill out. Your company's workers comp policy is in fact responsible for the costs, not your health insurance policy. It has a vested interest in getting that money back in some way.
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 insurance firms have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Usually, 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 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 Policyholders?
For a start, if you have a deductible, it wasn't just your insurance company that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to be precise, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its expenses by upping your premiums and call it a day. On the other hand, if it has a competent legal team and goes after those cases enthusiastically, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half accountable), you'll typically get $500 back, depending on the laws in your state.
Furthermore, if the total loss 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 criminal defense lawyer 23294, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurers are not the same. When shopping around, it's worth examining the records of competing firms to evaluate whether they pursue legitimate subrogation claims; if they do so quickly; if they keep their customers posted 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 insurer has a record of honoring claims that aren't its responsibility and then protecting its profit margin by raising your premiums, you'll feel the sting later.