Subrogation is a term that's understood in legal and insurance circles but rarely by the policyholders who hire them. Rather than leave it to the professionals, it is to your advantage to know an overview of how it works. The more knowledgeable you are about it, the more likely it is that relevant proceedings will work out favorably.
Every insurance policy you have is a commitment that, if something bad happens to you, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If you get an injury while you're on the clock, for instance, your employer's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially accountable for services or repairs is usually a heavily involved affair – and time spent waiting sometimes adds to the damage to the policyholder – insurance companies often decide to pay up front and figure out the blame afterward. They then need a method to recoup the costs if, once the situation is fully assessed, they weren't actually responsible for the payout.
You head to the emergency room with a sliced-open finger. You hand the nurse your medical insurance card and she takes down your policy information. You get stitches and your insurer gets an invoice for the expenses. But the next afternoon, when you get to your place of employment – where the accident happened – your boss hands you workers compensation paperwork to file. Your company's workers comp policy is actually responsible for the costs, not your medical insurance policy. The latter has a right to recover its costs somehow.
How Subrogation Works
This is where subrogation comes in. It is the way 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. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurer is given some of your rights in exchange for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Policyholders?
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 – namely, $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to recover its costs by upping your premiums. On the other hand, if it has a knowledgeable legal team and pursues them aggressively, it is acting both in its own interests and in yours. If all 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 culpable), you'll typically get half your deductible back, depending on your state laws.
Furthermore, 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 lawsuit attorney spanish fork ut, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurance companies are not created equal. When shopping around, it's worth weighing the records of competing agencies to determine whether they pursue winnable subrogation claims; if they resolve those claims without dragging their feet; if they keep their accountholders advised as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, on the other hand, an insurance agency has a reputation of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, you'll feel the sting later.