Subrogation is a term that's understood among insurance and legal professionals but rarely by the customers they represent. Even if you've never heard the word before, it would be to your advantage to understand the nuances of the process. The more information you have, the more likely relevant proceedings will work out in your favor.
An insurance policy you own is a commitment that, if something bad happens to you, the insurer of the policy will make restitutions without unreasonable delay. If your house is robbed, for instance, your property insurance agrees to repay you or enable the repairs, subject to state property damage laws.
But since ascertaining who is financially responsible for services or repairs is sometimes a time-consuming affair – and time spent waiting in some cases increases the damage to the victim – insurance firms in many cases decide to pay up front and assign blame later. They then need a method to get back the costs if, when there is time to look at all the facts, they weren't in charge of the payout.
You arrive at the doctor's office with a deeply cut finger. You hand the nurse your medical insurance card and he takes down your plan details. You get taken care of and your insurance company is billed for the medical care. But on the following morning, when you get to your workplace – where the accident occurred – your boss hands you workers compensation forms to turn in. Your workers comp policy is in fact responsible for the expenses, not your medical insurance policy. The latter has an interest in recovering its costs 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 to your person or property. But under subrogation law, your insurance company 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.
Why Should I Care?
For starters, if your insurance policy stipulated 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 lost some money too – to be precise, $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to get back its losses by boosting your premiums. On the other hand, if it has a knowledgeable legal team and goes after those cases efficiently, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full thousand-dollar 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, depending on your state laws.
Furthermore, if the total cost 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 accidental death lawyer Washington DC, pursue subrogation and succeeds, it will recover your expenses as well as its own.
All insurance companies are not the same. When shopping around, it's worth looking at the records of competing companies to determine if they pursue winnable subrogation claims; if they resolve those claims without delay; if they keep their customers advised as the case continues; 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 record of honoring claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you should keep looking.