Subrogation is an idea that's understood among legal and insurance professionals but rarely by the customers they represent. Even if you've never heard the word before, it would be in your benefit to comprehend the nuances of the process. The more information you have, the better decisions you can make about your insurance company.
Any insurance policy you hold is a promise that, if something bad occurs, the firm 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) determine who was at fault and that person's insurance covers the damages.
But since ascertaining who is financially accountable for services or repairs is regularly a confusing affair – and time spent waiting sometimes compounds the damage to the policyholder – insurance firms in many cases decide to pay up front and figure out the blame after the fact. They then need a mechanism to recoup the costs if, when all is said and done, they weren't in charge of the payout.
Can You Give an Example?
You arrive at the doctor's office with a gouged finger. You give the nurse your health insurance card and she takes down your plan details. You get taken care of and your insurance company gets an invoice for the services. But on the following afternoon, when you get to your workplace – where the injury happened – your boss hands you workers compensation forms to turn in. Your company's workers comp policy is in fact responsible for the payout, not your health insurance policy. The latter has an interest in recovering its costs somehow.
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. Normally, only you can sue for damages done 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 that was originally due to you, because it has covered the amount already.
How Does This Affect Me?
For starters, 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 have a stake in the outcome as well – to the tune of $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to get back its expenses by boosting your premiums and call it a day. On the other hand, if it has a proficient legal team and goes after those cases aggressively, it is acting both in its own interests and in yours. If all ten grand is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get half your deductible back, depending on your state laws.
In addition, if the total price of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as malpractice lawyer Washington DC, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurance agencies are not created equal. When shopping around, it's worth weighing the reputations of competing companies to evaluate whether they pursue winnable subrogation claims; if they do so with some expediency; if they keep their accountholders informed 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 insurer has a record of honoring claims that aren't its responsibility and then safeguarding its income by raising your premiums, you should keep looking.