Subrogation is a term that's well-known in legal and insurance circles but sometimes not by the customers who hire them. Even if it sounds complicated, it would be in your self-interest to know the steps of how it works. The more information you have, the better decisions you can make about your insurance company.
An insurance policy you hold is a commitment that, if something bad happens to you, the insurer of the policy will make good without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and the judicial system, when necessary) decide who was to blame and that person's insurance pays out.
But since ascertaining who is financially accountable for services or repairs is regularly a heavily involved affair – and delay sometimes adds to the damage to the victim – insurance firms usually opt to pay up front and assign blame after the fact. They then need a way to get back the costs if, when all the facts are laid out, they weren't actually responsible for the payout.
Can You Give an Example?
You go to the Instacare with a sliced-open finger. You hand the nurse your medical insurance card and she records your policy details. You get taken care of and your insurer gets a bill for the tab. But the next morning, when you clock in at your place of employment – where the injury occurred – you are given workers compensation paperwork to fill out. Your workers comp policy is actually responsible for the expenses, not your medical insurance company. 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 payment after it has paid for something that should have been paid by some other entity. 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. Normally, only you can sue for damages done to your person or property. But under subrogation law, your insurer is extended 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 Does This Matter to Me?
For one thing, if your insurance policy stipulated a deductible, your insurer 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 insurance company is lax about bringing subrogation cases to court, it might opt to recover its losses by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases enthusiastically, it is acting both in its own interests and in yours. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half to blame), you'll typically get half your deductible back, depending on the laws in your state.
Moreover, if the total expense 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 real estate lawyer Lake Geneva, WI, pursue subrogation and wins, it will recover your costs as well as its own.
All insurance companies are not the same. When shopping around, it's worth examining the reputations of competing firms to find out whether they pursue valid subrogation claims; if they resolve those claims without delay; if they keep their customers posted as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you should keep looking.