Subrogation is an idea that's understood among insurance and legal professionals but rarely by the people they represent. Even if it sounds complicated, it is to your advantage to know the steps of the process. The more knowledgeable you are about it, the better decisions you can make about your insurance company.
Every insurance policy you have is an assurance that, if something bad happens to you, the firm on the other end of the policy will make restitutions without unreasonable delay. If a storm damages your house, for example, your property insurance agrees to compensate you or enable the repairs, subject to state property damage laws.
But since figuring out who is financially responsible for services or repairs is usually a heavily involved affair – and time spent waiting often increases the damage to the policyholder – insurance companies usually opt to pay up front and assign blame afterward. They then need a mechanism to recover the costs if, in the end, they weren't actually responsible for the expense.
Can You Give an Example?
You rush into the doctor's office with a gouged finger. You hand the nurse your health insurance card and she records your plan information. You get stitched up and your insurance company gets an invoice for the medical care. But the next day, when you arrive at work – where the injury happened – you are given workers compensation paperwork to turn in. Your workers comp policy is actually responsible for the hospital visit, not your health insurance company. 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 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. Normally, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is given some of your rights for having taken care of the damages. It can go after the money that was 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, it wasn't just your insurance company 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 insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recoup its expenses by upping your premiums. On the other hand, if it knows which cases it is owed and pursues those cases enthusiastically, it is doing you a favor as well as itself. If all ten grand 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 accountable), you'll typically get $500 back, depending on your state laws.
In addition, if the total expense 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 lawyer for child custody Lindon ut, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurers are not the same. When comparing, it's worth contrasting the records of competing agencies to determine whether they pursue winnable subrogation claims; if they resolve those claims fast; if they keep their policyholders apprised as the case continues; 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, on the other hand, an insurer has a record of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, you should keep looking.