Subrogation is a term that's well-known among insurance and legal companies but sometimes not by the people they represent. Even if it sounds complicated, it is in your self-interest to comprehend the nuances of the process. The more knowledgeable you are, the better decisions you can make about your insurance policy.
An insurance policy you hold is a promise that, if something bad occurs, the insurer of the policy will make restitutions in a timely fashion. If your vehicle is in a fender-bender, insurance adjusters (and the judicial system, when necessary) decide who was at fault and that person's insurance covers the damages.
But since determining who is financially accountable for services or repairs is regularly a confusing affair – and time spent waiting sometimes increases the damage to the policyholder – insurance firms in many cases opt to pay up front and assign blame afterward. They then need a means to regain the costs if, ultimately, they weren't responsible for the expense.
Let's Look at an Example
You arrive at the Instacare with a deeply cut finger. You give the nurse your medical insurance card and he writes down your coverage details. You get taken care of and your insurer gets an invoice for the medical care. But the next morning, when you get to work – where the accident happened – your boss hands you workers compensation paperwork to file. Your workers comp policy is actually responsible for the bill, not your medical insurance. The latter has a right to recover its money somehow.
How Does Subrogation Work?
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. Normally, only you can sue for damages done to your self 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.
Why Does This Matter to Me?
For a start, if your insurance policy stipulated 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 – to the tune of $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to recoup its losses by boosting your premiums. On the other hand, if it has a capable legal team and goes after them aggressively, it is acting both in its own interests and in yours. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half culpable), you'll typically get $500 back, depending on the laws in your state.
In addition, 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 employment law springville ut, pursue subrogation and wins, it will recover your expenses as well as its own.
All insurance agencies are not the same. When comparing, it's worth looking at the reputations of competing agencies to evaluate if they pursue legitimate subrogation claims; if they resolve those claims without dragging their feet; if they keep their accountholders posted as the case proceeds; 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 record of paying out claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you should keep looking.