Subrogation and How It Affects Policyholders
Subrogation is a term that's well-known in legal and insurance circles but sometimes not by the people they represent. Even if you've never heard the word before, it is in your benefit to comprehend an overview of the process. The more knowledgeable you are about it, the more likely it is that relevant proceedings will work out in your favor.
Every insurance policy you have is an assurance that, if something bad happens to you, the company that insures the policy will make good in one way or another in a timely manner. If your house burns down, your property insurance agrees to pay you or facilitate the repairs, subject to state property damage laws.
But since figuring out who is financially responsible for services or repairs is often a tedious, lengthy affair – and delay in some cases increases the damage to the policyholder – insurance firms often opt to pay up front and figure out the blame later. They then need a way to regain the costs if, when all the facts are laid out, they weren't in charge of the payout.
Can You Give an Example?
You head to the emergency room with a sliced-open finger. You hand the receptionist your medical insurance card and she records your plan details. You get stitches and your insurance company gets a bill for the tab. But on the following morning, when you get to work – where the accident occurred – your boss hands you workers compensation forms to fill out. Your workers comp policy is actually responsible for the payout, not your medical insurance. 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. Under ordinary circumstances, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is given 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 Do I Need to Know This?
For starters, if you have a deductible, your insurance company wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its costs by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases efficiently, it is acting both in its own interests and in yours. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half responsible), you'll typically get $500 back, depending on your state laws.
Furthermore, if the total cost of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as personal injury attorney Tacoma WA, pursue subrogation and succeeds, it will recover your expenses as well as its own.
All insurance agencies are not created equal. When comparing, it's worth measuring the records of competing agencies to evaluate if they pursue winnable subrogation claims; if they resolve those claims with some expediency; if they keep their clients updated as the case proceeds; 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 insurance company has a record of paying out claims that aren't its responsibility and then covering its bottom line by raising your premiums, you should keep looking.