Subrogation is an idea that's understood in insurance and legal circles but rarely by the policyholders who employ them. Rather than leave it to the professionals, it would be to your advantage to comprehend an overview of the process. The more you know, the better decisions you can make with regard to your insurance company.
Every 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 home burns down, your property insurance agrees to pay you or pay for the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is sometimes a heavily involved affair – and time spent waiting often increases the damage to the victim – insurance companies in many cases decide to pay up front and assign blame afterward. They then need a path to recover the costs if, once the situation is fully assessed, they weren't actually responsible for the payout.
Can You Give an Example?
You head to the hospital with a gouged finger. You give the nurse your medical insurance card and she writes down your plan information. You get stitches and your insurer is billed for the tab. But on the following morning, when you clock in at your workplace – where the injury occurred – you are given workers compensation forms to turn in. Your workers comp policy is actually responsible for the costs, not your medical insurance. It has a vested interest in getting that money back somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the process 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. Ordinarily, only you can sue for damages done to your person or property. But under subrogation law, your insurer is given some of your rights for making good on 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 you have a deductible, your insurer wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to recover its costs by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases enthusiastically, it is doing you a favor as well as itself. If all $10,000 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 to blame), you'll typically get $500 back, depending on your state laws.
In addition, if the total cost 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 catastrophic injury law firm Rosedale MD, pursue subrogation and succeeds, it will recover your expenses in addition to its own.
All insurance companies are not the same. When shopping around, it's worth researching the records of competing firms to evaluate if they pursue winnable subrogation claims; if they resolve those claims quickly; if they keep their policyholders informed as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then covering its bottom line by raising your premiums, you should keep looking.