Subrogation is an idea that's understood in insurance and legal circles but rarely by the people they represent. Rather than leave it to the professionals, it would be to your advantage to comprehend an overview of how it works. The more knowledgeable you are, the better decisions you can make about your insurance policy.
Every insurance policy you have is an assurance that, if something bad occurs, the insurer of the policy will make good without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and the courts, when necessary) decide who was to blame and that person's insurance covers the damages.
But since ascertaining who is financially responsible for services or repairs is typically a time-consuming affair a€" and time spent waiting sometimes increases the damage to the policyholder a€" insurance companies often opt to pay up front and figure out the blame later. They then need a method to get back the costs if, in the end, they weren't actually in charge of the expense.
Let's Look at an Example
You head to the Instacare with a gouged finger. You give the nurse your health insurance card and she takes down your policy details. You get stitches and your insurer gets an invoice for the medical care. But the next morning, when you clock in at work a€" where the injury occurred a€" your boss hands you workers compensation paperwork to fill out. Your employer's workers comp policy is in fact responsible for the bill, not your health 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 method that an insurance company uses to claim reimbursement 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 that was originally due to you, because it has covered the amount already.
Why Does This Matter to Me?
For a start, if you have a deductible, it wasn't just your insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well a€" to the tune of $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to recoup its losses by ballooning your premiums. On the other hand, if it has a proficient legal team and goes after them aggressively, it is doing you a favor as well as itself. If all $10,000 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 accountable), you'll typically get half your deductible back, based on the laws in most states.
Furthermore, if the total loss 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 Divorce law pleasant grove ut, pursue subrogation and succeeds, it will recover your losses in addition to its own.
All insurance agencies are not the same. When comparing, it's worth scrutinizing the reputations of competing companies to find out if they pursue valid subrogation claims; if they do so in a reasonable amount of time; if they keep their accountholders informed as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, instead, an insurance agency has a record of paying out claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you should keep looking.