Subrogation is an idea that's understood in insurance and legal circles but often not by the people they represent. Even if it sounds complicated, it is to your advantage to know the nuances of how it works. The more knowledgeable you are, the more likely relevant proceedings will work out in your favor.
An insurance policy you hold is a commitment that, if something bad happens to you, the insurer of the policy will make restitutions without unreasonable delay. If you get hurt while you're on the clock, for example, your employer'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 responsible for services or repairs is sometimes a tedious, lengthy affair – and delay sometimes compounds the damage to the victim – insurance companies usually opt to pay up front and figure out the blame after the fact. They then need a way to get back the costs if, when all is said and done, they weren't responsible for the expense.
Let's Look at an Example
You arrive at the hospital with a gouged finger. You hand the receptionist your health insurance card and he records your coverage information. You get stitches and your insurance company gets a bill for the expenses. But the next morning, when you arrive at your workplace – where the accident happened – you are given workers compensation paperwork to fill out. Your workers comp policy is actually responsible for the hospital trip, not your health insurance policy. The latter has a right to recover its costs in some way.
How Subrogation Works
This is where subrogation comes in. It is the method 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 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 Individuals?
For a start, if you have a deductible, it wasn't just your insurance company 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 insurance company is lax about bringing subrogation cases to court, it might opt to recover its expenses by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them aggressively, it is doing you a favor as well as itself. If all 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 at fault), you'll typically get $500 back, based on the laws in most states.
Moreover, if the total loss of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as wrongful death lawyer Tacoma, WA, pursue subrogation and wins, it will recover your costs as well as its own.
All insurance agencies are not the same. When shopping around, it's worth scrutinizing the reputations of competing companies to find out whether they pursue legitimate subrogation claims; if they do so without delay; if they keep their clients apprised as the case continues; 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 company has a record of honoring claims that aren't its responsibility and then covering its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.