Subrogation is a concept that's well-known among legal and insurance professionals but rarely by the policyholders they represent. Even if you've never heard the word before, it would be to your advantage to know an overview of the process. The more you know, the better decisions you can make with regard to your insurance company.
Any insurance policy you have is a promise that, if something bad happens to you, the business that covers the policy will make restitutions without unreasonable delay. 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 pays out.
But since figuring out who is financially responsible for services or repairs is regularly a tedious, lengthy affair – and time spent waiting sometimes compounds the damage to the victim – insurance firms in many cases decide to pay up front and figure out the blame later. They then need a way to get back the costs if, when all is said and done, they weren't actually responsible for the payout.
You go to the emergency room with a deeply cut finger. You give the receptionist your health insurance card and she records your coverage information. You get taken care of and your insurance company gets a bill for the services. But on the following afternoon, when you arrive at work – where the accident occurred – your boss hands you workers compensation forms to turn in. Your company's workers comp policy is actually responsible for the bill, not your health insurance company. The latter has an interest in recovering its money in some way.
How Subrogation Works
This is where subrogation comes in. It is the way 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. 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 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 Should I Care?
For a start, if your insurance policy stipulated a deductible, your insurance company wasn't the only one who 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 timid on any subrogation case it might not win, it might choose to recoup its costs by raising your premiums. On the other hand, if it knows which cases it is owed and pursues them aggressively, it is doing you a favor as well as itself. 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 accountable), you'll typically get half your deductible back, based on the laws in most states.
In addition, if the total price 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 lawyer tacoma wa, pursue subrogation and succeeds, it will recover your expenses in addition to its own.
All insurers are not created equal. When comparing, it's worth measuring the reputations of competing firms to find out whether they pursue legitimate subrogation claims; if they resolve those claims quickly; if they keep their customers 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, on the other hand, an insurance agency has a record of honoring claims that aren't its responsibility and then covering its income by raising your premiums, even attractive rates won't outweigh the eventual headache.