Subrogation is an idea that's understood among insurance and legal professionals but often not by the people who employ them. Even if you've never heard the word before, it would be in your self-interest to understand the steps of the process. The more knowledgeable you are, the better decisions you can make with regard to your insurance policy.
An insurance policy you own is a commitment that, if something bad occurs, the business on the other end of the policy will make good without unreasonable delay. If your property is broken into, for instance, your property insurance agrees to pay you or enable the repairs, subject to state property damage laws.
But since figuring out who is financially accountable for services or repairs is regularly a heavily involved affair a€" and delay in some cases compounds the damage to the policyholder a€" insurance companies in many cases opt to pay up front and assign blame afterward. They then need a path to recoup the costs if, when all the facts are laid out, they weren't actually in charge of the expense.
Can You Give an Example?
You go to the emergency room with a gouged finger. You hand the nurse your health insurance card and he records your coverage details. You get stitched up and your insurance company is billed for the medical care. But the next day, when you get to your workplace a€" where the injury happened a€" you are given workers compensation forms to turn in. Your company's workers comp policy is in fact responsible for the invoice, not your health insurance policy. The latter has a right to recover its money in some way.
How Does Subrogation Work?
This is where subrogation comes in. It is the process that an insurance company uses to claim payment 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 self or property. But under subrogation law, your insurance company is considered to have some of your rights in exchange for having taken care of 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 Me?
For starters, 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 a€" to be precise, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to get back its costs by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them efficiently, it is acting both in its own interests and in yours. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half responsible), you'll typically get $500 back, depending on your state laws.
Moreover, if the total price 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 Divorce attorney spanish fork UT, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance agencies are not created equal. When comparing, it's worth measuring the reputations of competing firms to evaluate if they pursue valid subrogation claims; if they do so without dragging their feet; if they keep their policyholders updated as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, on the other hand, an insurance firm has a reputation of paying out claims that aren't its responsibility and then covering its income by raising your premiums, you'll feel the sting later.