Subrogation is a concept that's well-known in insurance and legal circles but rarely by the customers who employ them. Rather than leave it to the professionals, it is to your advantage to know the steps of how it works. The more information you have about it, the more likely relevant proceedings will work out favorably.
Any insurance policy you have is an assurance that, if something bad occurs, the company on the other end of the policy will make restitutions without unreasonable delay. If your vehicle is hit, insurance adjusters (and the judicial system, when necessary) decide who was at fault and that party's insurance covers the damages.
But since ascertaining who is financially accountable for services or repairs is regularly a tedious, lengthy affair – and delay sometimes adds to the damage to the policyholder – insurance companies usually opt to pay up front and figure out the blame later. They then need a method to regain 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 head to the Instacare with a gouged finger. You hand the nurse your medical insurance card and she records your plan information. You get stitched up and your insurance company gets an invoice for the services. But the next day, when you get to your place of employment – where the injury happened – your boss hands you workers compensation forms to turn in. Your employer's workers comp policy is in fact responsible for the payout, not your medical insurance policy. The latter has an interest in recovering its costs somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the process 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 extended 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 insurance company that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to be precise, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its costs by ballooning your premiums. On the other hand, if it has a knowledgeable legal team and goes after those cases efficiently, it is doing you a favor as well as itself. If all 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 to blame), you'll typically get $500 back, based on the laws in most states.
Furthermore, if the total expense of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as workers comp lawyer Duluth, pursue subrogation and wins, it will recover your costs as well as its own.
All insurers are not created equal. When shopping around, it's worth comparing the reputations of competing agencies to evaluate if they pursue valid subrogation claims; if they resolve those claims fast; if they keep their policyholders apprised as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, on the other hand, an insurer has a reputation of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.