Subrogation is a term that's understood in legal and insurance circles but often not by the customers who hire them. Even if you've never heard the word before, it is in your self-interest to comprehend the steps of how it works. The more you know about it, the more likely it is that relevant proceedings will work out favorably.
An insurance policy you have is a promise that, if something bad happens to you, the firm on the other end of the policy will make good in a timely fashion. If you get an injury on the job, for instance, 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 typically a tedious, lengthy affair – and time spent waiting sometimes increases the damage to the policyholder – insurance companies usually opt to pay up front and figure out the blame afterward. They then need a method to recoup the costs if, when all the facts are laid out, they weren't responsible for the expense.
Let's Look at an Example
You go to the doctor's office with a deeply cut finger. You hand the nurse your health insurance card and she takes down your plan details. You get stitches and your insurance company is billed for the medical care. But the next morning, when you clock in at your workplace – 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 hospital trip, not your health insurance. 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. Normally, only you can sue for damages done to your person 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 that was originally due to you, because it has covered the amount already.
How Does This Affect Me?
For one thing, if you have a deductible, it wasn't just your insurance company that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its costs by raising your premiums. On the other hand, if it has a capable legal team and pursues 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 50 percent to blame), you'll typically get half your deductible back, depending on the laws in your state.
In addition, if the total expense of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as family law lawyer Olympia, WA, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurers are not the same. When comparing, it's worth looking up the reputations of competing companies to find out if they pursue valid subrogation claims; if they resolve those claims with some expediency; if they keep their customers posted as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, instead, an insurance firm has a reputation of paying out 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.