Subrogation is an idea that's well-known among insurance and legal companies but sometimes not by the people they represent. Even if it sounds complicated, it would be to your advantage to comprehend an overview of how it works. The more information you have, the better decisions you can make about your insurance policy.
An insurance policy you own is a promise that, if something bad happens to you, the company that insures the policy will make good without unreasonable delay. If you get hurt while working, your employer's workers compensation insurance picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially responsible for services or repairs is regularly a tedious, lengthy affair – and delay in some cases compounds the damage to the victim – insurance companies often decide to pay up front and assign blame after the fact. They then need a way to regain the costs if, in the end, they weren't in charge of the expense.
You go to the emergency room with a sliced-open finger. You give the nurse your health insurance card and he records your plan details. You get taken care of and your insurance company gets a bill for the tab. But on the following afternoon, when you clock in at your workplace – where the accident happened – you are given workers compensation forms to turn in. Your employer's workers comp policy is actually responsible for the bill, not your health insurance company. The latter has a right to recover its money somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the way 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. Normally, only you can sue for damages to your self or property. But under subrogation law, your insurance company is given some of your rights in exchange 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 you have 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 lost some money too – namely, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its losses by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues 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 one-half accountable), you'll typically get $500 back, based on the laws in most states.
In addition, if the total loss 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 Lawyers serving Sumner wa, pursue subrogation and succeeds, it will recover your expenses as well as its own.
All insurers are not created equal. When shopping around, it's worth examining the records of competing firms to determine if they pursue winnable subrogation claims; if they resolve those claims with some expediency; if they keep their clients apprised as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, on the other hand, an insurer has a reputation of honoring claims that aren't its responsibility and then covering its profit margin by raising your premiums, you'll feel the sting later.