Subrogation is a concept that's understood among insurance and legal firms but rarely by the people who employ them. Even if you've never heard the word before, it is to your advantage to know the nuances of how it works. The more information you have, the more likely it is that an insurance lawsuit will work out in your favor.
An insurance policy you have is an assurance that, if something bad happens to you, the company that covers the policy will make restitutions in one way or another in a timely fashion. If your home is burglarized, your property insurance agrees to compensate you or facilitate the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is regularly a confusing affair – and time spent waiting in some cases increases the damage to the policyholder – insurance companies often decide to pay up front and figure out the blame afterward. They then need a method to get back the costs if, when all is said and done, they weren't responsible for the expense.
You arrive at the hospital with a sliced-open finger. You hand the receptionist your medical insurance card and she writes down your policy details. You get taken care of and your insurance company gets an invoice for the expenses. But on the following morning, when you arrive at your workplace – where the injury occurred – your boss hands you workers compensation paperwork to file. Your workers comp policy is in fact responsible for the expenses, not your medical insurance policy. The latter has an interest in recovering its money somehow.
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim payment after it has paid for something that should have been paid by some other entity. Some companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Under ordinary circumstances, only you can sue for damages to your person or property. But under subrogation law, your insurance company is given 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 one thing, 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 – to be precise, $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to get back its costs by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases aggressively, 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 half your deductible back, depending on your state laws.
Additionally, 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 workers comp attorney Pasadena MD, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance companies are not the same. When shopping around, it's worth examining the reputations of competing companies to find out whether they pursue winnable subrogation claims; if they resolve those claims 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 losses back and move on with your life. If, instead, an insurance firm has a record of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, even attractive rates won't outweigh the eventual headache.