Subrogation is a term that's understood in legal and insurance circles but sometimes not by the customers who employ them. Even if it sounds complicated, it is in your self-interest to know an overview of the process. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance company.
Any insurance policy you own is a promise that, if something bad occurs, the business that covers the policy will make good without unreasonable delay. If your vehicle is hit, insurance adjusters (and the courts, when necessary) determine who was to blame and that person's insurance covers the damages.
But since figuring out who is financially responsible for services or repairs is often a heavily involved affair – and time spent waiting sometimes compounds the damage to the policyholder – insurance companies usually opt to pay up front and assign blame afterward. They then need a path to get back the costs if, when all the facts are laid out, they weren't responsible for the expense.
Let's Look at an Example
You go to the Instacare with a deeply cut finger. You give the nurse your health insurance card and he records your policy details. You get taken care of and your insurance company gets an invoice for the tab. But on the following day, when you arrive at work – where the accident happened – your boss hands you workers compensation paperwork to file. Your workers comp policy is in fact responsible for the hospital visit, not your health insurance company. The latter has an interest in recovering its costs in some way.
How Subrogation Works
This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement 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. Ordinarily, only you can sue for damages done 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 Me?
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 have a stake in the outcome as well – namely, $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to recoup its losses by boosting your premiums. On the other hand, if it has a knowledgeable legal team and goes after them enthusiastically, it is acting both in its own interests and in yours. 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 to blame), you'll typically get half your deductible back, based on the laws in most states.
Moreover, if the total loss 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 employment law springville ut, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance agencies are not the same. When comparing, it's worth comparing the records of competing firms to evaluate if they pursue legitimate subrogation claims; if they do so with some expediency; if they keep their clients updated as the case continues; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, instead, an insurance firm has a reputation of honoring claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you'll feel the sting later.