Subrogation is a concept that's well-known among insurance and legal companies but often not by the customers they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your self-interest to comprehend an overview of how it works. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance company.
An insurance policy you own is an assurance that, if something bad occurs, the firm that insures the policy will make good in a timely manner. If your vehicle is rear-ended, insurance adjusters (and police, when necessary) decide who was to blame and that person's insurance pays out.
But since figuring out who is financially responsible for services or repairs is typically a time-consuming affair – and time spent waiting sometimes adds to the damage to the victim – insurance firms often opt to pay up front and assign blame after the fact. They then need a method to recoup the costs if, once the situation is fully assessed, they weren't actually in charge of the payout.
Let's Look at an Example
You head to the doctor's office with a sliced-open finger. You hand the nurse your health insurance card and he records your coverage details. You get taken care of and your insurer gets an invoice for the tab. But the next afternoon, when you clock in at your workplace – where the injury happened – you are given workers compensation forms to turn in. Your workers comp policy is actually responsible for the costs, not your health insurance. The latter has a right to recover its money somehow.
How Subrogation Works
This is where subrogation comes in. It is the process 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. Normally, only you can sue for damages to your self or property. But under subrogation law, your insurer is considered to have some of your rights in exchange 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 a start, if you have 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 – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to get back its expenses by raising your premiums. On the other hand, if it knows which cases it is owed and pursues them efficiently, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get half your deductible back, depending on the laws in your state.
Moreover, if the total cost of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as custody attorney Lindon ut, pursue subrogation and succeeds, it will recover your costs as well as its own.
All insurance companies are not created equal. When comparing, it's worth comparing the records of competing companies to evaluate if they pursue valid subrogation claims; if they do so fast; if they keep their account holders informed as the case continues; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, instead, an insurance firm has a reputation of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, you should keep looking.