Subrogation is a term that's well-known in insurance and legal circles but rarely by the people who hire them. Even if you've never heard the word before, it would be in your benefit to understand the steps of how it works. The more knowledgeable you are, the better decisions you can make with regard to your insurance company.
An insurance policy you hold is a promise that, if something bad happens to you, the company that covers the policy will make restitutions in a timely fashion. If you get injured while you're on the clock, for example, your employer's workers compensation pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially responsible for services or repairs is usually a time-consuming affair – and delay sometimes adds to the damage to the victim – insurance firms usually opt to pay up front and figure out the blame afterward. They then need a way to regain the costs if, ultimately, they weren't actually in charge of the expense.
Can You Give an Example?
You rush into the Instacare with a sliced-open finger. You give the receptionist your medical insurance card and she takes down your plan information. You get taken care of and your insurer is billed for the services. But on the following afternoon, when you clock in at work – where the accident happened – you are given workers compensation paperwork to file. Your company's workers comp policy is in fact responsible for the bill, not your medical insurance company. It has a vested interest in getting that money back somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the way that an insurance company uses to claim payment after it has paid for something that should have been paid by some other entity. Some companies 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 done to your person or property. But under subrogation law, your insurer is considered to have 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 starters, if you have a deductible, it wasn't just your insurer 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 expenses by ballooning your premiums. On the other hand, if it knows which cases it is owed and pursues those cases aggressively, it is doing you a favor as well as itself. If all is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent responsible), you'll typically get half your deductible back, based on the laws in most states.
Moreover, if the total expense 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 child custody law firm Henderson Nv, pursue subrogation and wins, it will recover your losses as well as its own.
All insurance agencies are not created equal. When shopping around, it's worth looking at the records of competing companies to determine if they pursue valid subrogation claims; if they resolve those claims fast; if they keep their clients informed as the case goes on; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, on the other hand, an insurance firm has a reputation of paying out claims that aren't its responsibility and then covering its profit margin by raising your premiums, you should keep looking.