Subrogation is an idea that's well-known in legal and insurance circles but sometimes not by the people they represent. Even if it sounds complicated, it is in your benefit to comprehend the steps of how it works. The more information you have about it, the more likely it is that relevant proceedings will work out in your favor.
Any insurance policy you hold is an assurance that, if something bad happens to you, the insurer of the policy will make restitutions without unreasonable delay. If your real estate burns down, your property insurance agrees to pay you or enable the repairs, subject to state property damage laws.
But since figuring out who is financially responsible for services or repairs is typically a tedious, lengthy affair – and delay in some cases increases the damage to the victim – insurance firms in many cases decide to pay up front and assign blame after the fact. They then need a mechanism to recover the costs if, in the end, they weren't actually in charge of the expense.
Let's Look at an Example
You arrive at the emergency room with a gouged finger. You hand the receptionist your medical insurance card and she writes down your plan information. You get taken care of and your insurer is billed for the medical care. But the next afternoon, when you arrive at your workplace – where the injury occurred – you are given workers compensation forms to fill out. Your employer's workers comp policy is actually responsible for the payout, not your medical insurance. It has a vested interest in getting that money back in some way.
How Subrogation Works
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 insurer is considered to have some of your rights for having taken care of the damages. It can go after the money 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, your insurer wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to get back its losses by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them efficiently, it is acting both in its own interests and in yours. 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 culpable), you'll typically get $500 back, based on the laws in most states.
Moreover, if the total price 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 olympia wa, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance agencies are not created equal. When comparing, it's worth measuring the reputations of competing companies to determine if they pursue valid subrogation claims; if they resolve those claims with some expediency; if they keep their policyholders posted as the case continues; and if they then process successfully won reimbursements quickly so that you can get your money 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 covering its profitability by raising your premiums, you should keep looking.