Subrogation and How It Affects Your Insurance Policy

Subrogation is a concept that's well-known in legal and insurance circles but rarely by the customers they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your self-interest to understand the nuances of how it works. The more knowledgeable you are, the better decisions you can make about your insurance policy.

Every insurance policy you hold is an assurance that, if something bad happens to you, the business that insures the policy will make restitutions in a timely fashion. If you get hurt while you're on the clock, your employer's workers compensation agrees to pay 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 sometimes a tedious, lengthy affair – and delay sometimes compounds the damage to the policyholder – insurance companies in many cases opt to pay up front and figure out the blame afterward. They then need a mechanism to recover the costs if, once the situation is fully assessed, they weren't in charge of the payout.

Let's Look at an Example

You head to the emergency room with a sliced-open finger. You give the receptionist your health insurance card and he takes down your coverage details. You get stitched up and your insurer gets an invoice for the tab. But on the following day, when you get to work – where the injury occurred – your boss hands you workers compensation forms to turn in. Your employer's workers comp policy is actually responsible for the costs, not your health insurance. The latter has a right to recover its costs somehow.

How Subrogation Works

This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement 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. Usually, only you can sue for damages done to your person or property. But under subrogation law, your insurer is extended some of your rights in exchange for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.

Why Do I Need to Know This?

For starters, if you have a deductible, your insurer 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 – namely, $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to recover its costs by upping your premiums. On the other hand, if it knows which cases it is owed and goes after those cases efficiently, it is doing you a favor as well as itself. If all of the money is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get $500 back, depending on your state laws.

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 immigration attorney near me Sandy Ut, pursue subrogation and succeeds, it will recover your expenses as well as its own.

All insurers are not the same. When comparing, it's worth contrasting the records of competing companies to evaluate whether they pursue valid subrogation claims; if they resolve those claims without delay; if they keep their customers apprised as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, instead, an insurer has a record of paying out claims that aren't its responsibility and then covering its income by raising your premiums, even attractive rates won't outweigh the eventual headache.