Subrogation is a concept that's understood among insurance and legal professionals but rarely by the policyholders who hire them. Even if it sounds complicated, it would be to your advantage to understand an overview of how it works. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance policy.
Any insurance policy you have is a promise that, if something bad occurs, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and the judicial system, when necessary) determine who was to blame and that person's insurance pays out.
But since determining who is financially responsible for services or repairs is usually a tedious, lengthy affair – and time spent waiting in some cases adds to the damage to the policyholder – insurance firms often opt to pay up front and figure out the blame after the fact. They then need a means to regain the costs if, when all the facts are laid out, they weren't responsible for the expense.
You rush into the emergency room with a gouged finger. You hand the nurse your medical insurance card and she writes down your coverage details. You get stitches and your insurer is billed for the services. But on the following morning, when you arrive at work – where the accident happened – your boss hands you workers compensation paperwork to turn in. Your employer's workers comp policy is in fact responsible for the payout, not your medical insurance company. It has a vested interest in getting that money back in some way.
How Does Subrogation Work?
This is where subrogation comes in. It is the way that an insurance company uses to claim payment 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 self or property. But under subrogation law, your insurer is considered to have 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 a start, if your insurance policy stipulated a deductible, your insurer wasn't the only one that 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 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 aggressively, it is acting both in its own interests and in yours. 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 one-half culpable), you'll typically get half your deductible back, depending on the laws in your state.
Moreover, 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 workman's comp insurance Purcellville, VA, successfully press a subrogation case, it will recover your costs as well as its own.
All insurers are not created equal. When shopping around, it's worth measuring the reputations of competing firms to find out whether they pursue legitimate subrogation claims; if they do so quickly; if they keep their policyholders advised as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, on the other hand, an insurance company has a record of honoring claims that aren't its responsibility and then protecting its profitability by raising your premiums, you'll feel the sting later.