Subrogation is an idea that's understood among legal and insurance companies but often not by the customers who employ them. Even if it sounds complicated, it would be in your self-interest to know the steps of how it works. The more knowledgeable you are, the better decisions you can make about your insurance company.
An insurance policy you have is a commitment that, if something bad occurs, the insurer of the policy will make good in one way or another without unreasonable delay. If you get an injury while you're on the clock, for instance, your employer's workers compensation insurance pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially accountable for services or repairs is sometimes a confusing affair – and time spent waiting 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 mechanism to recoup the costs if, in the end, they weren't actually responsible for the payout.
Let's Look at an Example
You arrive at the hospital with a sliced-open finger. You hand the receptionist your medical insurance card and he records your policy details. You get stitched up and your insurance company is billed for the tab. But on the following morning, when you get to your workplace – where the accident happened – your boss hands you workers compensation paperwork to fill out. Your workers comp policy is actually responsible for the expenses, not your medical insurance. It has a vested interest in getting that money back in some way.
How Subrogation Works
This is where subrogation comes in. It is the way that an insurance company uses to claim payment 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. Under ordinary circumstances, only you can sue for damages to your self or property. But under subrogation law, your insurance company is extended some of your rights in exchange 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.
Why Do I Need to Know This?
For starters, 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 – to the tune of $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its losses by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them efficiently, 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 $500 back, depending on your state laws.
In addition, if the total cost 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 criminal defense law Provo UT, pursue subrogation and succeeds, it will recover your expenses as well as its own.
All insurance companies are not created equal. When comparing, it's worth examining the reputations of competing companies to find out if they pursue winnable subrogation claims; if they do so in a reasonable amount of time; if they keep their accountholders informed as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your money back and move on with your life. If, instead, an insurer has a record of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.