Subrogation is a concept that's understood among legal and insurance companies but rarely by the customers they represent. Rather than leave it to the professionals, it is to your advantage to understand the steps of how it works. The more knowledgeable you are about it, the more likely relevant proceedings will work out favorably.
An insurance policy you have is a commitment that, if something bad happens to you, the business that covers the policy will make good in one way or another in a timely manner. If your real estate suffers fire damage, your property insurance steps in to repay you or pay for the repairs, subject to state property damage laws.
But since figuring out who is financially responsible for services or repairs is often a heavily involved affair – and time spent waiting often adds to the damage to the policyholder – insurance firms in many cases opt to pay up front and assign blame after the fact. They then need a path to recoup the costs if, when there is time to look at all the facts, they weren't in charge of the payout.
For Example
You go to the hospital with a sliced-open finger. You hand the receptionist your health insurance card and she takes down your policy details. You get stitched up and your insurer gets an invoice for the expenses. But on the following afternoon, when you get to your place of employment – where the injury happened – you are given workers compensation forms to fill out. Your company's workers comp policy is in fact responsible for the expenses, 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 method that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. Some insurance firms have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Under ordinary circumstances, only you can sue for damages done to your self or property. But under subrogation law, your insurer is extended some of your rights for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Should I Care?
For one thing, 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 – to the tune of $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to recover its costs by boosting your premiums. On the other hand, if it knows which cases it is owed and goes after them 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 accountable), you'll typically get half your deductible back, based on the laws in most states.
Additionally, if the total cost 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 legal representation Tumwater, WA, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurers are not created equal. When shopping around, it's worth measuring the records of competing agencies to determine if they pursue valid subrogation claims; if they do so quickly; if they keep their accountholders posted as the case goes on; and if they then process successfully won reimbursements right away so that you can get your losses back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.