Subrogation is an idea that's well-known among insurance and legal companies but rarely by the people who hire them. Even if it sounds complicated, it is in your benefit to understand an overview of how it works. The more you know, the more likely it is that relevant proceedings will work out in your favor.
An insurance policy you own is a promise that, if something bad happens to you, the firm that covers the policy will make good in one way or another without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and the courts, when necessary) determine who was at fault and that party's insurance covers the damages.
But since figuring out who is financially responsible for services or repairs is often a time-consuming affair – and delay often increases the damage to the victim – insurance firms usually opt to pay up front and assign blame after the fact. They then need a means to recover the costs if, in the end, they weren't responsible for the payout.
You arrive at the hospital with a gouged finger. You give the receptionist your medical insurance card and she records your policy information. You get stitches and your insurer is billed for the tab. But on the following afternoon, when you arrive at your place of employment – where the injury occurred – your boss hands you workers compensation paperwork to file. Your employer's workers comp policy is in fact responsible for the costs, not your medical insurance. The latter has an interest in recovering its money somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the process 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. Ordinarily, only you can sue for damages to your person or property. But under subrogation law, your insurer is extended 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.
How Does This Affect Individuals?
For starters, if your insurance policy stipulated a deductible, your insurer wasn't the only one who 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 insurance company is timid on any subrogation case it might not win, it might choose to get back its losses by raising your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases aggressively, it is doing you a favor as well as itself. If all of the money is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent accountable), you'll typically get half your deductible back, based on the laws in most states.
Moreover, if the total expense of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as family law Vancouver WA, pursue subrogation and wins, it will recover your expenses as well as its own.
All insurers are not created equal. When shopping around, it's worth scrutinizing the reputations of competing firms to determine if they pursue legitimate subrogation claims; if they do so without delay; if they keep their policyholders updated as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, on the other hand, an insurance company has a record of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, even attractive rates won't outweigh the eventual headache.