Subrogation is an idea that's well-known among insurance and legal firms but often not by the people they represent. Rather than leave it to the professionals, it is in your self-interest to comprehend the nuances of the process. The more knowledgeable you are, the better decisions you can make with regard to your insurance company.
An insurance policy you own is an assurance that, if something bad occurs, the firm that insures the policy will make restitutions in one way or another in a timely fashion. If your vehicle is hit, insurance adjusters (and the judicial system, when necessary) decide who was to blame and that party's insurance covers the damages.
But since figuring out who is financially accountable for services or repairs is usually a time-consuming affair – and time spent waiting sometimes compounds the damage to the victim – insurance firms in many cases decide to pay up front and figure out the blame after the fact. They then need a means to recover the costs if, ultimately, they weren't actually in charge of the payout.
Can You Give an Example?
You arrive at the emergency room with a deeply cut finger. You hand the receptionist your health insurance card and he takes down your coverage information. You get stitches and your insurer gets a bill for the services. But the next day, when you arrive at work – where the accident happened – your boss hands you workers compensation paperwork to turn in. Your employer's workers comp policy is actually responsible for the costs, not your health insurance policy. It has a vested interest in getting that money back in some way.
How Does Subrogation Work?
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 person or property. But under subrogation law, your insurer is considered to have 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.
Why Do I Need to Know This?
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 – to be precise, $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to recover its losses by increasing your premiums. On the other hand, if it has a capable legal team and pursues them enthusiastically, it is doing you a favor as well as itself. If all $10,000 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 responsible), you'll typically get half your deductible back, depending on the laws in your state.
Moreover, 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 auto accident injury attorney Rosedale MD, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurance agencies are not the same. When comparing, it's worth measuring the records of competing firms to evaluate whether they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their accountholders apprised as the case continues; 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, on the other hand, an insurer has a record of paying out claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you should keep looking.