Subrogation is a concept that's well-known in legal and insurance circles but rarely by the people they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is to your advantage to understand the nuances of the process. The more knowledgeable you are, the more likely it is that relevant proceedings will work out favorably.
Every insurance policy you hold is an assurance that, if something bad occurs, the insurer of the policy will make restitutions in one way or another in a timely manner. If your home suffers fire damage, for example, your property insurance agrees to compensate 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 typically a heavily involved affair – and time spent waiting sometimes increases the damage to the victim – insurance companies often opt to pay up front and figure out the blame later. They then need a way to recover the costs if, when all the facts are laid out, they weren't in charge of the expense.
Can You Give an Example?
You go to the Instacare with a gouged finger. You hand the nurse your medical insurance card and he records your plan details. You get stitches and your insurer gets an invoice for the expenses. But the next day, when you arrive at your place of employment – where the accident happened – your boss hands you workers compensation forms to turn in. Your employer's workers comp policy is in fact responsible for the invoice, not your medical insurance company. It has a vested interest in getting that money back in some way.
How Subrogation Works
This is where subrogation comes in. It is the process that an insurance company uses to claim payment 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. Under ordinary circumstances, only you can sue for damages to your person or property. But under subrogation law, your insurer is considered to have 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.
Why Do I Need to Know This?
For a start, if you have a deductible, your insurer wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to be precise, $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to recover its expenses by increasing your premiums. On the other hand, if it has a knowledgeable legal team and pursues them 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 one-half accountable), you'll typically get $500 back, depending on your state laws.
Furthermore, if the total cost 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 employment lawyer salem ut, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurance agencies are not the same. When comparing, it's worth looking up the reputations of competing companies to determine if they pursue legitimate subrogation claims; if they resolve those claims with some expediency; if they keep their customers posted as the case goes on; 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 insurance firm has a record of honoring claims that aren't its responsibility and then safeguarding its income by raising your premiums, you'll feel the sting later.