Subrogation is a concept that's well-known among legal and insurance professionals but sometimes not by the customers who hire them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your benefit to understand an overview of the process. The more information you have, the more likely relevant proceedings will work out in your favor.
Every insurance policy you own is an assurance that, if something bad occurs, the company that insures the policy will make good without unreasonable delay. If you get hurt at work, your company's workers compensation agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially accountable for services or repairs is typically a confusing affair – and time spent waiting sometimes adds to the damage to the policyholder – insurance firms usually decide to pay up front and figure out the blame after the fact. They then need a means to get back the costs if, when all the facts are laid out, they weren't actually in charge of the payout.
Let's Look at an Example
You arrive at the Instacare with a deeply cut finger. You give the nurse your health insurance card and she writes down your plan details. You get stitches and your insurer gets an invoice for the tab. But the next morning, when you clock in at your workplace – where the accident occurred – your boss hands you workers compensation paperwork to file. Your workers comp policy is in fact responsible for the payout, not your health insurance company. The latter has a right to recover its costs somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the method 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. Usually, only you can sue for damages to your self or property. But under subrogation law, your insurer is considered to have some of your rights for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Me?
For one thing, 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 lost some money too – namely, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its expenses by raising your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and goes after those cases efficiently, it is doing you a favor as well as itself. If all of the money 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, based on the laws in most states.
Additionally, 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 estate planning attorney Racine WI, pursue subrogation and succeeds, it will recover your expenses as well as its own.
All insurance agencies are not created equal. When comparing, it's worth looking up the reputations of competing companies to determine if they pursue winnable subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their policyholders posted as the case continues; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, instead, an insurer has a reputation of paying out claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you should keep looking.