Subrogation is a term that's understood in insurance and legal circles but rarely by the people who employ them. Even if it sounds complicated, it is to your advantage to comprehend an overview of the process. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance company.
Any insurance policy you hold is a commitment that, if something bad happens to you, the insurer of the policy will make restitutions in a timely fashion. If your vehicle is in a fender-bender, insurance adjusters (and the courts, when necessary) determine who was at fault and that person's insurance pays out.
But since ascertaining who is financially accountable for services or repairs is typically a confusing affair – and delay often increases the damage to the policyholder – insurance firms in many cases decide to pay up front and figure out the blame later. They then need a method to recover the costs if, once the situation is fully assessed, they weren't actually in charge of the payout.
Can You Give an Example?
You go to the doctor's office with a deeply cut finger. You give the nurse your medical insurance card and he takes down your plan information. You get stitches and your insurance company gets a bill for the services. But on the following morning, when you clock in at your place of employment – where the accident happened – you are given workers compensation forms to turn in. Your employer's workers comp policy is actually responsible for the invoice, not your medical insurance policy. 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 reimbursement when it pays out a claim that turned out not to be its responsibility. Some companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Usually, only you can sue for damages to your self 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 originally due to you, because it has covered the amount already.
Why Does This Matter to Me?
For one thing, if your insurance policy stipulated a deductible, your insurance company wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its expenses by upping your premiums. On the other hand, if it has a knowledgeable legal team and goes after them efficiently, it is acting both in its own interests and in yours. If all ten grand is recovered, you will get your full thousand-dollar 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.
Moreover, if the total cost 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 family law child custody Salt Lake City UT, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurers are not created equal. When comparing, it's worth researching the reputations of competing companies to evaluate if they pursue winnable subrogation claims; if they resolve those claims in a reasonable amount of time; 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 deductible back and move on with your life. If, on the other hand, an insurance company has a reputation of honoring claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.