Subrogation is a term that's understood among legal and insurance firms but rarely by the policyholders who hire them. Even if it sounds complicated, it is in your self-interest to comprehend the steps of the process. The more information you have, the better decisions you can make with regard to your insurance policy.
Every insurance policy you have is a commitment that, if something bad happens to you, the firm that insures the policy will make restitutions in one way or another in a timely manner. If your vehicle is in a fender-bender, insurance adjusters (and the courts, when necessary) decide who was to blame and that person's insurance pays out.
But since ascertaining who is financially accountable for services or repairs is usually a time-consuming affair – and delay sometimes adds to the damage to the victim – insurance firms often decide to pay up front and assign blame later. They then need a means to regain the costs if, when there is time to look at all the facts, they weren't responsible for the payout.
Let's Look at an Example
You go to the emergency room with a deeply cut finger. You give the receptionist your medical insurance card and he records your plan information. You get stitches and your insurance company gets an invoice for the tab. But the next afternoon, when you arrive at your workplace – where the injury happened – your boss hands you workers compensation paperwork to turn in. Your company's workers comp policy is in fact responsible for the bill, not your medical insurance policy. It has a vested interest in getting that money back in some way.
How Subrogation Works
This is where subrogation comes in. It is the method 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. Under ordinary circumstances, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is given 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 Individuals?
For a start, if your insurance policy stipulated a deductible, it wasn't just your insurance company that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to get back its costs by boosting your premiums. On the other hand, if it has a knowledgeable legal team 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 50 percent to blame), you'll typically get $500 back, depending on the laws in your state.
In addition, if the total loss 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 employment lawyer University Place WA, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurers are not created equal. When shopping around, it's worth looking up the records of competing agencies to evaluate if they pursue valid subrogation claims; if they resolve those claims fast; if they keep their account holders informed 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, instead, an insurance agency has a reputation of honoring claims that aren't its responsibility and then protecting its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.