Subrogation is an idea that's well-known in legal and insurance circles but often not by the policyholders who hire them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your self-interest to comprehend the steps of the process. The more knowledgeable you are about it, the more likely an insurance lawsuit will work out in your favor.
An insurance policy you have is a commitment that, if something bad happens to you, the firm on the other end of the policy will make good without unreasonable delay. If you get an injury on the job, your company's workers compensation pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially responsible for services or repairs is typically a tedious, lengthy affair – and time spent waiting often adds to the damage to the policyholder – insurance firms in many cases opt to pay up front and figure out the blame later. They then need a means to regain the costs if, when there is time to look at all the facts, they weren't responsible for the expense.
Can You Give an Example?
You head to the Instacare with a gouged finger. You hand the nurse your medical insurance card and he writes down your coverage information. You get stitches and your insurance company gets a bill for the medical care. But on the following day, when you clock in at your workplace – where the injury happened – you are given workers compensation paperwork to file. Your company's workers comp policy is actually responsible for the expenses, not your medical insurance policy. The latter has a right to recover its money somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the way that an insurance company uses to claim payment 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. Ordinarily, only you can sue for damages to your self or property. But under subrogation law, your insurance company is considered to have some of your rights in exchange 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 Policyholders?
For starters, if your insurance policy stipulated 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 the tune of $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recoup its losses by raising your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is doing you a favor as well as itself. If all 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 at fault), you'll typically get half your deductible back, based on the laws in most states.
Furthermore, if the total price of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as divorce attorney east troy, wi, pursue subrogation and wins, it will recover your expenses as well as its own.
All insurance companies are not the same. When comparing, it's worth comparing the reputations of competing agencies to evaluate if they pursue legitimate subrogation claims; if they resolve those claims with some expediency; if they keep their policyholders advised 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 insurer has a reputation of paying out claims that aren't its responsibility and then covering its income by raising your premiums, you'll feel the sting later.