Subrogation is a concept that's understood in insurance and legal circles but rarely by the customers they represent. Even if it sounds complicated, it would be to your advantage to know the steps of the process. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance policy.
Every insurance policy you have is an assurance that, if something bad happens to you, the company on the other end of the policy will make restitutions without unreasonable delay. If your vehicle is hit, insurance adjusters (and the judicial system, when necessary) determine who was to blame and that person's insurance pays out.
But since figuring out who is financially accountable for services or repairs is typically a heavily involved affair – and delay sometimes increases the damage to the policyholder – insurance companies often opt to pay up front and figure out the blame later. They then need a path to get back the costs if, once the situation is fully assessed, they weren't actually in charge of the expense.
Let's Look at an Example
You arrive at the emergency room with a gouged finger. You hand the nurse your medical insurance card and he takes down your plan details. You get taken care of and your insurer gets an invoice for the medical care. But the next afternoon, when you get to work – where the injury happened – you are given workers compensation forms to fill out. Your company's workers comp policy is actually responsible for the hospital trip, not your medical insurance. The latter has an interest in recovering its costs 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 when it pays out a claim that turned out not to be its responsibility. Some companies 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 self or property. But under subrogation law, your insurer is given 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 you have a deductible, your insurer wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to be precise, $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to recoup its losses by raising your premiums and call it a day. On the other hand, if it has a capable legal team and goes after those cases efficiently, it is doing you a favor as well as itself. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent culpable), you'll typically get half your deductible back, depending on your state laws.
Additionally, if the total expense 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 employment lawyer university place wa, successfully press a subrogation case, it will recover your costs as well as its own.
All insurance agencies are not created equal. When shopping around, it's worth comparing the records of competing firms to determine if they pursue winnable subrogation claims; if they resolve those claims without delay; if they keep their clients advised as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your deductible 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 covering its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.