Subrogation is an idea that's understood among insurance and legal companies but sometimes not by the customers they represent. Even if it sounds complicated, it is in your self-interest to comprehend the nuances of how it works. The more knowledgeable you are about it, the more likely relevant proceedings will work out favorably.
An insurance policy you have is a promise that, if something bad happens to you, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If you get an injury at work, for example, your employer's workers compensation insurance pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially responsible for services or repairs is regularly a confusing affair – and delay in some cases increases the damage to the policyholder – insurance firms in many cases opt to pay up front and assign blame afterward. They then need a method to get back the costs if, once the situation is fully assessed, they weren't in charge of the expense.
Let's Look at an Example
You go to the emergency room with a gouged finger. You give the receptionist your health insurance card and she writes down your plan details. You get stitches and your insurance company gets a bill for the expenses. But the next morning, when you arrive at work – where the accident happened – you are given workers compensation forms to file. Your employer's workers comp policy is in fact responsible for the expenses, not your health insurance. It has a vested interest in getting that money back somehow.
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. Some insurance firms 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 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 Should I Care?
For a start, if you have a deductible, it wasn't just your insurance company who 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 insurance company 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 competent legal team and goes after those cases aggressively, it is acting both in its own interests and in yours. If all of the money 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 responsible), you'll typically get half your deductible back, depending on the laws in your state.
Furthermore, if the total expense 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 lawyer Middle River MD, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurers are not created equal. When shopping around, it's worth contrasting the reputations of competing companies to evaluate whether they pursue legitimate subrogation claims; if they do so quickly; if they keep their customers updated as the case proceeds; 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 company has a reputation of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, you should keep looking.