Subrogation is a concept that's understood in legal and insurance circles but sometimes not by the people they represent. Rather than leave it to the professionals, it is in your self-interest to comprehend the nuances of how it works. The more you know about it, the better decisions you can make with regard to your insurance policy.
An insurance policy you have is an assurance that, if something bad happens to you, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is hit, insurance adjusters (and the courts, when necessary) decide who was to blame and that party's insurance pays out.
But since ascertaining who is financially responsible for services or repairs is sometimes a confusing affair – and delay in some cases adds to the damage to the policyholder – insurance companies in many cases decide to pay up front and assign blame afterward. They then need a method to get back the costs if, when all is said and done, they weren't actually in charge of the expense.
You head to the Instacare with a deeply cut finger. You hand the receptionist your medical insurance card and he writes down your coverage details. You get taken care of and your insurance company is billed for the expenses. But on the following afternoon, when you arrive at work – where the injury happened – your boss hands you workers compensation paperwork to file. Your workers comp policy is actually responsible for the payout, not your medical insurance company. The latter has a right to recover 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 reimbursement after it has paid for something that should have been paid by some other entity. 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 done to your person or property. But under subrogation law, your insurance company is considered to have 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.
How Does This Affect the Insured?
For one thing, if you have a deductible, your insurance company wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recover its losses by boosting your premiums. On the other hand, if it has a competent legal team and pursues 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 one-half culpable), you'll typically get $500 back, depending on your state laws.
Moreover, 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 divorce lawyer tumwater wa, pursue subrogation and wins, it will recover your losses as well as its own.
All insurance agencies are not created equal. When comparing, it's worth examining the records of competing companies to find out whether they pursue legitimate subrogation claims; if they resolve those claims fast; if they keep their policyholders advised as the case goes on; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, instead, an insurance company 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.