Subrogation is a term that's understood among insurance and legal professionals but sometimes not by the people they represent. Even if it sounds complicated, it is to your advantage to understand an overview of how it works. The more information you have, the more likely relevant proceedings will work out in your favor.
An insurance policy you own is a promise that, if something bad happens to you, the business that insures the policy will make good in one way or another in a timely manner. If you get an injury on the job, for example, your company's workers compensation pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially accountable for services or repairs is regularly a heavily involved affair – and time spent waiting often adds to the damage to the victim – insurance firms in many cases opt to pay up front and assign blame later. They then need a mechanism to recover the costs if, once the situation is fully assessed, they weren't in charge of the payout.
Let's Look at an Example
You rush into the hospital with a sliced-open finger. You give the receptionist your health insurance card and she writes down your plan details. You get taken care of and your insurer gets an invoice for the services. But on the following morning, when you get to your workplace – where the accident happened – you are given workers compensation paperwork to fill out. Your employer's workers comp policy is actually responsible for the hospital trip, not your health insurance policy. 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 insurance firms 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 extended some of your rights in exchange for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect 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 – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recover its costs by ballooning your premiums. On the other hand, if it has a competent legal team and pursues those cases efficiently, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get half your deductible back, depending on your state laws.
In addition, if the total expense 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 personal injury legal assistance Tacoma, WA, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurance companies are not the same. When comparing, it's worth contrasting the records of competing agencies to determine if they pursue legitimate subrogation claims; if they resolve those claims without dragging their feet; if they keep their clients updated as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, instead, an insurer has a reputation of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, you should keep looking.