Subrogation is a term that's well-known in legal and insurance circles but often not by the customers they represent. Even if it sounds complicated, it would be in your self-interest to comprehend the nuances of how it works. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance company.
Any insurance policy you own is an assurance that, if something bad happens to you, the insurer of the policy will make good in one way or another without unreasonable delay. If your property is burglarized, your property insurance steps in to pay you or enable the repairs, subject to state property damage laws.
But since figuring out who is financially accountable for services or repairs is regularly a tedious, lengthy affair – and delay in some cases compounds the damage to the victim – insurance companies usually decide to pay up front and assign blame later. They then need a means to regain the costs if, in the end, they weren't actually in charge of the payout.
Can You Give an Example?
You arrive at the Instacare with a deeply cut finger. You hand the receptionist your medical insurance card and he records your coverage details. You get taken care of and your insurer is billed for the medical care. But on the following afternoon, when you arrive at your workplace – where the injury occurred – you are given workers compensation paperwork to turn in. Your company's workers comp policy is in fact responsible for the payout, not your medical insurance policy. It has a vested interest in getting that money back somehow.
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement 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. Under ordinary circumstances, only you can sue for damages to your person 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 starters, if you have 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 – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to get back its expenses by raising your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues 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 thousand-dollar 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, based on the laws in most states.
In addition, if the total price 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 auto accident attorney Middle River MD, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurers are not the same. When comparing, it's worth looking at the reputations of competing agencies to find out if they pursue winnable subrogation claims; if they do so with some expediency; if they keep their customers informed as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, on the other hand, an insurance agency has a record of paying out claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you should keep looking.