Subrogation is a concept that's understood among insurance and legal companies but often not by the people who hire them. Even if it sounds complicated, it would be to your advantage to know the steps of how it works. The more you know about it, the more likely relevant proceedings will work out in your favor.
Every insurance policy you own is an assurance that, if something bad occurs, the firm that insures the policy will make good in one way or another in a timely fashion. If your home burns down, for instance, your property insurance steps in to repay you or facilitate the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is sometimes a confusing affair – and time spent waiting sometimes increases the damage to the policyholder – insurance firms often opt to pay up front and figure out the blame afterward. They then need a way to regain the costs if, ultimately, they weren't in charge of the expense.
Let's Look at an Example
You head to the hospital with a deeply cut finger. You hand the nurse your health insurance card and she records your policy details. You get taken care of and your insurer gets an invoice for the services. But on the following morning, when you arrive at work – where the injury happened – you are given workers compensation forms to fill out. Your company's workers comp policy is in fact responsible for the payout, not your health insurance policy. The latter has an interest in recovering its money in some way.
How Subrogation Works
This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement 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. Under ordinary circumstances, 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 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 the Insured?
For starters, if you have a deductible, your insurer wasn't the only one who 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 insurer is timid on any subrogation case it might not win, it might choose to recoup its costs by boosting your premiums. On the other hand, if it knows which cases it is owed and goes after them efficiently, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full $1,000 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.
Moreover, if the total cost of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as criminal defense attorney Springville UT, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurers are not the same. When shopping around, it's worth contrasting the records of competing agencies to evaluate whether they pursue legitimate subrogation claims; if they do so quickly; if they keep their clients advised 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 agency has a record of honoring claims that aren't its responsibility and then covering its profit margin by raising your premiums, you should keep looking.