Subrogation is a concept that's well-known among insurance and legal firms but rarely by the policyholders they represent. Rather than leave it to the professionals, it is in your self-interest to know an overview of the process. The more you know, the more likely an insurance lawsuit will work out favorably.
Every insurance policy you hold is a promise that, if something bad happens to you, the company on the other end of the policy will make restitutions without unreasonable delay. If you get hurt while you're on the clock, your company's workers compensation insurance pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially accountable for services or repairs is usually a time-consuming affair – and delay in some cases increases the damage to the policyholder – insurance companies in many cases decide to pay up front and assign blame later. They then need a path to regain the costs if, once the situation is fully assessed, they weren't in charge of the expense.
You go to the doctor's office with a gouged finger. You hand the nurse your health insurance card and he takes down your coverage information. You get stitched up and your insurance company is billed for the services. But the next afternoon, when you get to work – where the accident happened – your boss hands you workers compensation paperwork to file. Your employer's workers comp policy is in fact responsible for the invoice, not your health insurance. The latter has a right to recover 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 payment 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 done to your self or property. But under subrogation law, your insurance company is considered to have some of your rights 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 the Insured?
For one thing, if your insurance policy stipulated a deductible, your insurance company 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 be precise, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its costs by boosting your premiums. On the other hand, if it knows which cases it is owed and goes after those cases efficiently, it is doing you a favor as well as itself. If all of the money is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent responsible), you'll typically get $500 back, based on the laws in most states.
Furthermore, if the total loss of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as when to get a real estate lawyer Williams Bay, WI, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurers are not created equal. When shopping around, it's worth weighing the records of competing companies to evaluate whether they pursue winnable subrogation claims; if they do so in a reasonable amount of time; if they keep their policyholders advised as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, on the other hand, an insurance firm has a record of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, you'll feel the sting later.