Subrogation is a term that's understood among legal and insurance professionals but often not by the people they represent. Even if it sounds complicated, it would be to your advantage to know the steps of how it works. The more knowledgeable you are about it, the better decisions you can make about your insurance company.
Every insurance policy you have is an assurance that, if something bad happens to you, the insurer of the policy will make good in one way or another in a timely fashion. If your house suffers fire damage, your property insurance steps in to remunerate you or pay for the repairs, subject to state property damage laws.
But since figuring out who is financially responsible for services or repairs is regularly a tedious, lengthy affair – and delay often adds to the damage to the policyholder – insurance firms usually opt to pay up front and figure out the blame later. They then need a method to recoup the costs if, when there is time to look at all the facts, they weren't responsible for the payout.
Let's Look at an Example
You head to the doctor's office with a gouged finger. You give the receptionist your medical insurance card and he writes down your policy details. You get stitched up and your insurance company gets an invoice for the expenses. But on the following day, when you clock in at your place of employment – where the accident occurred – your boss hands you workers compensation paperwork to turn in. Your employer's workers comp policy is in fact responsible for the costs, not your medical insurance. The latter has a right to recover its money somehow.
How Does Subrogation Work?
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. Normally, only you can sue for damages to your person or property. But under subrogation law, your insurance company is given some of your rights for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Should I Care?
For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurance company that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to get back its costs by ballooning your premiums. On the other hand, if it has a competent legal team and goes after them aggressively, it is acting both in its own interests and in yours. If all is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found one-half culpable), you'll typically get half your deductible back, depending on the laws in your state.
Moreover, if the total price of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as Personal injury attorney Tacoma Wa, pursue subrogation and succeeds, it will recover your losses in addition to its own.
All insurers are not the same. When comparing, it's worth looking at the reputations of competing agencies to find out whether they pursue valid subrogation claims; if they do so without dragging their feet; if they keep their clients informed 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 honoring claims that aren't its responsibility and then safeguarding its income by raising your premiums, you should keep looking.