Subrogation is a term that's well-known in insurance and legal circles but sometimes not by the people they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your self-interest to comprehend an overview of the process. The more you know about it, the more likely it is that an insurance lawsuit will work out favorably.
Any insurance policy you own is a promise that, if something bad occurs, the company that insures the policy will make restitutions in a timely manner. If your vehicle is rear-ended, insurance adjusters (and police, when necessary) determine who was at fault and that party's insurance covers the damages.
But since ascertaining who is financially responsible for services or repairs is often a time-consuming affair – and time spent waiting sometimes increases the damage to the victim – insurance companies usually opt to pay up front and assign blame later. They then need a path to get back the costs if, ultimately, they weren't responsible for the expense.
You go to the Instacare with a deeply cut finger. You give the receptionist your health insurance card and she records your plan details. You get stitched up and your insurance company gets a bill for the services. But the next day, when you get to your workplace – where the injury happened – you are given workers compensation forms to turn in. Your workers comp policy is in fact responsible for the invoice, not your health insurance company. 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 way 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. Ordinarily, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is considered to have some of your rights in exchange for making good on 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 Policyholders?
For one thing, if you have a deductible, your insurance company wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to the tune of $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to get back its losses by boosting your premiums. On the other hand, if it knows which cases it is owed and goes after those cases enthusiastically, it is acting both in its own interests and in yours. If all $10,000 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 $500 back, based on the laws in most states.
Additionally, 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 costly. If your insurance company or its property damage lawyers, such as family law lawyers near me Salt Lake City UT, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurers are not the same. When shopping around, it's worth looking at the records of competing agencies to determine whether they pursue winnable subrogation claims; if they resolve those claims without dragging their feet; if they keep their clients informed as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, on the other hand, an insurance firm has a reputation of honoring claims that aren't its responsibility and then protecting its profit margin by raising your premiums, you'll feel the sting later.