Subrogation is a concept that's understood in legal and insurance circles but rarely by the policyholders they represent. Even if you've never heard the word before, it is in your benefit to understand the nuances of how it works. The more knowledgeable you are about it, the more likely an insurance lawsuit will work out favorably.
Every insurance policy you have is an assurance that, if something bad happens to you, the insurer of the policy will make good without unreasonable delay. If you get an injury at work, your employer's workers compensation agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially responsible for services or repairs is often a heavily involved affair – and delay often increases the damage to the victim – insurance firms in many cases decide to pay up front and figure out the blame later. They then need a means to recoup the costs if, when there is time to look at all the facts, they weren't actually in charge of the payout.
Let's Look at an Example
You go to the doctor's office with a deeply cut finger. You give the receptionist your medical insurance card and he records your coverage information. You get taken care of and your insurer gets a bill for the medical care. But on the following day, when you arrive at your place of employment – where the accident happened – your boss hands you workers compensation paperwork to file. Your employer's workers comp policy is in fact responsible for the invoice, not your medical insurance policy. It has a vested interest in getting that money back somehow.
How Subrogation Works
This is where subrogation comes in. It is the process that an insurance company uses to claim payment after it has paid for something that should have been paid by some other entity. 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 person or property. But under subrogation law, your insurer is extended 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.
How Does This Affect Me?
For a start, if your insurance policy stipulated a deductible, it wasn't just your insurer who 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 lax about bringing subrogation cases to court, it might choose to get back its losses by boosting your premiums. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is doing you a favor as well as itself. If all of the money is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half to blame), you'll typically get $500 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 lawsuit lawyer salem ut, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurers are not created equal. When comparing, it's worth looking up the reputations of competing agencies to determine whether they pursue valid subrogation claims; if they do so in a reasonable amount of time; if they keep their clients posted as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your money back and move on with your life. If, instead, an insurer has a record of paying out claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.