What You Need to Know About Subrogation

Subrogation is an idea that's well-known in insurance and legal circles but often not by the policyholders they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your benefit to comprehend an overview of the process. The more information you have, the better decisions you can make with regard to your insurance policy.

Any insurance policy you have is an assurance that, if something bad occurs, the company that covers the policy will make restitutions in one way or another in a timely fashion. If you get an injury while working, your employer's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.

But since ascertaining who is financially responsible for services or repairs is often a tedious, lengthy affair – and delay often compounds the damage to the victim – insurance firms in many cases opt to pay up front and figure out the blame after the fact. They then need a way to recover the costs if, ultimately, they weren't actually responsible for the payout.

Can You Give an Example?

You arrive at the Instacare with a sliced-open finger. You hand the receptionist your health insurance card and she records your policy details. You get taken care of and your insurance company gets an invoice for the expenses. But on the following day, when you get to your workplace – where the injury happened – you are given workers compensation forms to fill out. Your workers comp policy is in fact responsible for the costs, not your health insurance company. It has a vested interest in getting that money back somehow.

How Subrogation Works

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 companies 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 done to your person or property. But under subrogation law, your insurance company is considered to have some of your rights for making good on 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 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 – to the tune of $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to recover its expenses by upping your premiums. On the other hand, if it knows which cases it is owed and pursues them efficiently, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half to blame), you'll typically get half your deductible back, depending on your state laws.

Additionally, if the total cost of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as workers compensation law Lake Geneva WI, pursue subrogation and wins, it will recover your costs in addition to its own.

All insurers are not the same. When shopping around, it's worth looking at the records of competing companies to evaluate whether they pursue winnable subrogation claims; if they do so with some expediency; if they keep their accountholders advised as the case proceeds; and if they then process successfully won reimbursements quickly 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 paying out claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you'll feel the sting later.