Subrogation is an idea that's understood among insurance and legal companies but sometimes not by the people they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your self-interest to understand the steps of the process. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance company.
Every insurance policy you have is a promise that, if something bad happens to you, the business on the other end of the policy will make restitutions without unreasonable delay. If your real estate burns down, for example, your property insurance agrees to compensate you or enable the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is typically a time-consuming affair – and time spent waiting in some cases increases the damage to the victim – insurance companies in many cases decide to pay up front and figure out the blame afterward. They then need a method to recover the costs if, when there is time to look at all the facts, they weren't in charge of the payout.
For Example
You go to the Instacare with a deeply cut finger. You give the nurse your medical insurance card and she takes down your plan information. You get taken care of and your insurer gets a bill for the services. But the next afternoon, when you get to work – where the injury occurred – you are given workers compensation forms to file. Your company's workers comp policy is actually responsible for the invoice, not your medical insurance. The latter has an interest in recovering its money in some way.
How Does Subrogation Work?
This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement 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. Under ordinary circumstances, only you can sue for damages done to your person or property. But under subrogation law, your insurer is considered to have some of your rights for having taken care of the damages. It can go after the money that was originally due to you, because it has covered the amount already.
Why Should I Care?
For a start, if your insurance policy stipulated a deductible, it wasn't just your insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to be precise, $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to recover its costs by ballooning your premiums. On the other hand, if it has a knowledgeable legal team and pursues them efficiently, it is acting both in its own interests and in yours. 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 responsible), you'll typically get half your deductible back, based on the laws in most states.
Additionally, if the total price 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 Personal injury attorney near me Bonney Lake WA, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurers are not created equal. When shopping around, it's worth looking at the records of competing companies to determine whether they pursue valid subrogation claims; if they do so fast; if they keep their customers informed as the case continues; and if they then process successfully won reimbursements right away so that you can get your losses back and move on with your life. If, instead, an insurer has a reputation of paying out claims that aren't its responsibility and then protecting its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.