Subrogation is a term that's well-known in legal and insurance circles but rarely by the customers they represent. Even if you've never heard the word before, it is in your self-interest to know an overview of how it works. The more information you have about it, the more likely an insurance lawsuit will work out favorably.
An insurance policy you have is an assurance that, if something bad occurs, the company that insures the policy will make good in one way or another in a timely manner. If your real estate burns down, for example, your property insurance agrees to pay you or facilitate the repairs, subject to state property damage laws.
But since ascertaining who is financially responsible for services or repairs is regularly a time-consuming affair – and time spent waiting sometimes increases the damage to the victim – insurance companies usually opt to pay up front and assign blame later. They then need a method to recoup the costs if, when there is time to look at all the facts, they weren't actually in charge of the expense.
Can You Give an Example?
You go to the emergency room with a sliced-open finger. You hand the receptionist your medical insurance card and he records your plan details. You get stitches and your insurer gets a bill for the expenses. But on the following day, when you get to your place of employment – where the injury occurred – you are given workers compensation forms to turn in. Your company's workers comp policy is in fact responsible for the bill, not your medical insurance policy. The latter has a right to recover its money somehow.
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement 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 to your person or property. But under subrogation law, your insurer is given 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.
Why Should I Care?
For starters, if your insurance policy stipulated a deductible, your insurer 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 the tune of $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its losses by upping your premiums and call it a day. On the other hand, if it has a proficient legal team and pursues those cases enthusiastically, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half to blame), you'll typically get half your deductible back, depending on the laws in your state.
Additionally, if the total loss of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as personal injury lawyer Tacoma, WA, pursue subrogation and succeeds, it will recover your expenses as well as its own.
All insurance companies are not created equal. When comparing, it's worth looking at the reputations of competing agencies to find out whether they pursue legitimate subrogation claims; if they do so without dragging their feet; if they keep their clients advised as the case continues; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, instead, an insurance firm has a reputation of honoring claims that aren't its responsibility and then covering its income by raising your premiums, you should keep looking.