Subrogation is a term that's understood among legal and insurance professionals but sometimes not by the policyholders they represent. Even if you've never heard the word before, it would be in your self-interest to understand the steps of how it works. The more you know, the more likely it is that an insurance lawsuit will work out in your favor.
An insurance policy you hold is a commitment that, if something bad occurs, the business on the other end of the policy will make good in one way or another without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and the courts, when necessary) decide who was at fault and that person's insurance covers the damages.
But since figuring out who is financially accountable for services or repairs is typically a time-consuming affair – and time spent waiting often adds to the damage to the victim – insurance firms usually opt to pay up front and assign blame later. They then need a mechanism to recover the costs if, when there is time to look at all the facts, they weren't actually in charge of the expense.
Let's Look at an Example
You rush into the hospital with a gouged finger. You give the nurse your health insurance card and he takes down your coverage information. You get taken care of and your insurer is billed for the expenses. But on the following afternoon, when you clock in at work – where the accident occurred – your boss hands you workers compensation forms to fill out. Your workers comp policy is actually responsible for the bill, not your health insurance policy. 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. Usually, only you can sue for damages done to your person or property. But under subrogation law, your insurer is considered to have some of your rights in exchange for having taken care of the damages. It can go after the money that was originally due to you, because it has covered the amount already.
Why Should I Care?
For starters, if your insurance policy stipulated a deductible, it wasn't just your insurer 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 unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its costs by raising your premiums. On the other hand, if it has a competent legal team and pursues those cases enthusiastically, it is acting both in its own interests and in yours. 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 responsible), you'll typically get $500 back, based on the laws in most states.
Furthermore, if the total expense of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as immigration defense attorney Herriman UT, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurance companies are not created equal. When comparing, it's worth researching the records of competing firms to find out if they pursue winnable subrogation claims; if they resolve those claims quickly; if they keep their customers informed as the case goes on; and if they then process successfully won reimbursements right away so that you can get your money 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 protecting its income by raising your premiums, you'll feel the sting later.