Subrogation is an idea that's understood in legal and insurance circles but sometimes not by the people they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your benefit to comprehend an overview of the process. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance company.
An insurance policy you own is a commitment that, if something bad happens to you, the firm that covers the policy will make good in one way or another without unreasonable delay. If you get injured at work, for example, your company's workers compensation picks up the tab 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 regularly a time-consuming affair – and delay often adds to the damage to the policyholder – insurance firms usually opt to pay up front and figure out the blame afterward. They then need a method to recover the costs if, when all is said and done, they weren't responsible for the payout.
Let's Look at an Example
You arrive at the emergency room with a deeply cut finger. You hand the nurse your health insurance card and he takes down your policy information. You get stitched up and your insurance company gets an invoice for the medical care. But the next afternoon, when you get to 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 hospital trip, not your health insurance company. The latter has an interest in recovering its costs somehow.
How Does Subrogation Work?
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 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 done to your self or property. But under subrogation law, your insurance company is given 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 Policyholders?
For a start, if your insurance policy stipulated a deductible, your insurance company wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to the tune of $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to get back its expenses by upping your premiums. On the other hand, if it has a proficient legal team and goes after them aggressively, it is acting both in its own interests and in yours. If all $10,000 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 accountable), you'll typically get $500 back, depending on your state laws.
Furthermore, 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 malpractice lawyer Washington DC, pursue subrogation and wins, it will recover your costs in addition to its own.
All insurance companies are not created equal. When comparing, it's worth examining the records of competing firms to find out whether they pursue winnable subrogation claims; if they do so without dragging their feet; if they keep their accountholders apprised 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 insurer has a reputation of paying out claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you'll feel the sting later.