Subrogation is an idea that's understood among insurance and legal professionals but rarely by the people who hire them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is to your advantage to know an overview of how it works. The more you know, the more likely it is that an insurance lawsuit will work out favorably.
Every insurance policy you hold is an assurance that, if something bad happens to you, the company that insures the policy will make restitutions in one way or another without unreasonable delay. If a blizzard damages your home, for example, your property insurance agrees to pay you or enable the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is typically a confusing affair – and delay sometimes increases the damage to the victim – insurance firms usually opt to pay up front and assign blame later. They then need a way to regain the costs if, in the end, they weren't actually in charge of the payout.
For Example
You arrive at the emergency room with a deeply cut finger. You give the nurse your medical insurance card and she takes down your plan details. You get stitched up and your insurer gets an invoice for the expenses. But on the following afternoon, when you arrive at your place of employment – where the accident happened – you are given workers compensation paperwork to file. Your employer's workers comp policy is actually responsible for the bill, not your medical insurance company. It has a vested interest in getting that money back somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement 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. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurer is extended 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.
Why Should I Care?
For a start, 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 – to the tune of $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to recover its expenses by increasing your premiums and call it a day. On the other hand, if it has a proficient legal team and goes after those cases aggressively, it is doing you a favor as well as itself. If all $10,000 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 responsible), you'll typically get half your deductible back, depending on your state laws.
Additionally, if the total cost of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as car accident attorney Rosedale MD, successfully press a subrogation case, it will recover your costs as well as its own.
All insurers are not the same. When shopping around, it's worth scrutinizing the reputations of competing agencies to find out if they pursue legitimate subrogation claims; if they resolve those claims fast; if they keep their accountholders posted 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, on the other hand, an insurance company 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.