Subrogation is a concept that's understood among legal and insurance professionals but rarely by the policyholders they represent. Even if you've never heard the word before, it would be to your advantage to comprehend the nuances of the process. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance company.
Any insurance policy you have is an assurance that, if something bad occurs, the insurer of the policy will make good without unreasonable delay. If you get injured while you're on the clock, your company's workers compensation insurance picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially responsible for services or repairs is regularly a heavily involved affair – and time spent waiting in some cases increases the damage to the victim – insurance companies often decide to pay up front and assign blame afterward. They then need a method to regain 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 doctor's office with a deeply cut finger. You give the nurse your medical insurance card and he takes down your coverage information. You get stitches and your insurance company is billed for the tab. But the next morning, when you get to your place of employment – where the accident happened – you are given workers compensation paperwork to turn in. Your employer's workers comp policy is actually responsible for the hospital trip, not your medical insurance. It has a vested interest in getting that money back somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the process 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. Usually, only you can sue for damages to your self or property. But under subrogation law, your insurance company is extended 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.
How Does This Affect the Insured?
For starters, 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 be precise, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its expenses by raising your premiums. On the other hand, if it knows which cases it is owed and goes after those cases efficiently, it is acting both in its own interests and in yours. If all of the money 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 culpable), you'll typically get $500 back, depending on the laws in your state.
Furthermore, 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 personal injury lawyer Bonney Lake WA, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurers are not the same. When shopping around, it's worth contrasting the records of competing agencies to find out whether they pursue valid subrogation claims; if they resolve those claims fast; if they keep their accountholders apprised as the case proceeds; 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 insurance agency 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.