Subrogation is an idea that's understood in legal and insurance circles but often not by the people who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be to your advantage to know the nuances of the process. The more you know about it, the more likely an insurance lawsuit will work out favorably.
An insurance policy you hold is a commitment that, if something bad occurs, the firm that covers the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and the courts, when necessary) decide who was at fault and that party's insurance pays out.
But since ascertaining who is financially responsible for services or repairs is usually a tedious, lengthy affair a€" and delay in some cases increases the damage to the policyholder a€" insurance companies usually decide to pay up front and assign blame afterward. They then need a way to recoup the costs if, in the end, they weren't actually in charge of the expense.
Can You Give an Example?
You rush into the emergency room with a sliced-open finger. You give the receptionist your medical insurance card and she takes down your policy details. You get stitched up and your insurance company gets an invoice for the tab. But on the following day, when you arrive at your workplace a€" where the injury occurred a€" you are given workers compensation forms to fill out. Your company's workers comp policy is actually responsible for the payout, not your medical insurance policy. 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 when it pays out a claim that turned out not to be its responsibility. 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 person 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 Me?
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 lost some money too a€" to the tune of $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its costs by raising your premiums and call it a day. On the other hand, if it has a proficient legal team and goes after those cases efficiently, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent responsible), you'll typically get $500 back, based on the laws in most states.
Furthermore, 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 attorney american fork UT, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurers are not the same. When comparing, it's worth looking at the records of competing firms to find out whether they pursue valid subrogation claims; if they do so fast; if they keep their accountholders informed as the case continues; and if they then process successfully won reimbursements right away so that you can get your losses 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 income by raising your premiums, you'll feel the sting later.