Subrogation is a term that's understood among insurance and legal professionals but rarely by the people they represent. Rather than leave it to the professionals, it is to your advantage to know an overview of how it works. The more information you have about it, the more likely it is that an insurance lawsuit will work out in your favor.
An insurance policy you own is a promise that, if something bad occurs, the firm on the other end of the policy will make good without unreasonable delay. If you get an injury on the job, your employer's workers compensation agrees to pay 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 delay often adds to the damage to the policyholder – insurance firms often decide to pay up front and figure out the blame later. They then need a method to regain the costs if, when all the facts are laid out, they weren't actually responsible for the payout.
Let's Look at an Example
You go to the doctor's office with a deeply cut finger. You hand the nurse your medical insurance card and he takes down your coverage information. You get stitched up and your insurance company gets an invoice for the services. But the next afternoon, when you arrive at work – where the injury happened – your boss hands you workers compensation forms to file. Your employer's workers comp policy is in fact 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 method 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. Usually, 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 making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect the Insured?
For one thing, if your insurance policy stipulated a deductible, your insurance company wasn't the only one 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 unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its expenses by ballooning your premiums and call it a day. On the other hand, if it has a competent legal team and goes after those cases efficiently, it is doing you a favor as well as itself. If all of the money is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found one-half at fault), you'll typically get $500 back, based on the laws in most states.
In addition, if the total expense 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 criminal defense lawyer 79101, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurance agencies are not the same. When comparing, it's worth comparing the reputations of competing firms to determine whether they pursue winnable subrogation claims; if they do so in a reasonable amount of time; if they keep their policyholders updated as the case continues; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, on the other hand, an insurer has a record of honoring claims that aren't its responsibility and then covering its income by raising your premiums, you should keep looking.