The Things You Need to Know About Subrogation

Subrogation is a term that's well-known among legal and insurance firms but sometimes not by the policyholders who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is to your advantage to comprehend the steps of how it works. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance policy.

Every insurance policy you have is a commitment that, if something bad happens to you, the firm that insures the policy will make good in one way or another in a timely manner. If you get injured on the job, for example, your employer's workers compensation pays out for medical services. Employment lawyers handle the details; you just get fixed up.

But since ascertaining who is financially responsible for services or repairs is usually a tedious, lengthy affair – and time spent waiting in some cases adds to the damage to the victim – insurance firms often opt to pay up front and assign blame later. They then need a way to get back the costs if, in the end, they weren't responsible for the expense.

Let's Look at an Example

You rush into the Instacare with a sliced-open finger. You hand the nurse your medical insurance card and he writes down your policy details. You get stitched up and your insurer gets a bill for the medical care. But the next day, when you get to your place of employment – where the accident happened – you are given workers compensation forms to turn in. Your workers comp policy is actually responsible for the invoice, not your medical insurance company. It has a vested interest in getting that money back somehow.

How Does Subrogation Work?

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 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 self or property. But under subrogation law, your insurer is considered to have some of your rights for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.

Why Should I Care?

For one thing, if you have a deductible, it wasn't just your insurer that 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 insurer is timid on any subrogation case it might not win, it might opt to recover its expenses by raising your premiums and call it a day. On the other hand, if it has a competent legal team and pursues them efficiently, it is doing you a favor as well as itself. 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 one-half accountable), you'll typically get half your deductible back, depending on the laws in your state.

Furthermore, 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 personal injury attorney near me Sumner WA, successfully press a subrogation case, it will recover your expenses as well as its own.

All insurance agencies are not the same. When shopping around, it's worth comparing the reputations of competing companies to evaluate whether they pursue valid subrogation claims; if they resolve those claims fast; if they keep their accountholders informed 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 agency has a record of paying out claims that aren't its responsibility and then covering its income by raising your premiums, even attractive rates won't outweigh the eventual headache.