Subrogation is an idea that's well-known in insurance and legal circles but sometimes not by the customers who employ them. Even if you've never heard the word before, it would be in your benefit to know an overview of how it works. The more you know about it, the better decisions you can make about your insurance company.
An insurance policy you own is an assurance that, if something bad occurs, the company that covers the policy will make good without unreasonable delay. If you get injured while you're on the clock, 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 figuring out who is financially accountable for services or repairs is often a confusing affair a€" and time spent waiting in some cases adds to the damage to the policyholder a€" insurance firms often opt to pay up front and figure out the blame afterward. They then need a means to recover the costs if, when there is time to look at all the facts, they weren't actually responsible for the expense.
Can You Give an Example?
You arrive at the hospital with a deeply cut finger. You hand the nurse your health insurance card and she records your plan details. You get stitches and your insurance company gets a bill for the services. But the next morning, when you clock in at your workplace a€" where the accident happened a€" you are given workers compensation forms to turn in. Your workers comp policy is in fact responsible for the expenses, not your health insurance. The latter has an interest in recovering its money in some way.
How Does Subrogation Work?
This is where subrogation comes in. It is the way that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. 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 insurance company is extended some of your rights in exchange 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.
How Does This Affect Me?
For a start, if your insurance policy stipulated a deductible, it wasn't just your insurance company who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too a€" to be precise, $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to recover its losses by increasing your premiums and call it a day. On the other hand, if it has a proficient legal team and pursues those cases enthusiastically, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full $1,000 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, depending on your state laws.
In addition, 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 Divorce law provo ut, successfully press a subrogation case, it will recover your losses as well as its own.
All insurers are not the same. When comparing, it's worth looking at the reputations of competing companies to evaluate whether they pursue valid subrogation claims; if they resolve those claims fast; if they keep their clients updated as the case continues; and if they then process successfully won reimbursements immediately so that you can get your money back and move on with your life. If, on the other hand, an insurance company has a record of honoring claims that aren't its responsibility and then covering its profit margin by raising your premiums, you'll feel the sting later.