Subrogation is an idea that's understood in insurance and legal circles but sometimes 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 knowledgeable you are about it, the more likely it is that an insurance lawsuit will work out in your favor.
Every insurance policy you have is a promise that, if something bad occurs, the insurer of the policy will make good in a timely manner. If your house is robbed, for instance, your property insurance agrees to pay you or facilitate the repairs, subject to state property damage laws.
But since ascertaining who is financially responsible for services or repairs is regularly a tedious, lengthy affair – and delay in some cases adds to the damage to the victim – insurance firms often opt to pay up front and assign blame afterward. They then need a means to recoup the costs if, in the end, they weren't actually in charge of the payout.
You rush into the doctor's office with a gouged finger. You give the nurse your medical insurance card and she writes down your plan information. You get stitches and your insurer gets an invoice for the medical care. But on the following afternoon, when you clock in at work – where the accident occurred – you are given workers compensation forms to file. Your employer's workers comp policy is in fact responsible for the costs, not your medical insurance. The latter has an interest in recovering its costs in some way.
How Subrogation Works
This is where subrogation comes in. It is the way that an insurance company uses to claim payment after it has paid for something that should have been paid by some other entity. 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 to your person or property. But under subrogation law, your insurer is given 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 Should I Care?
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 lax about bringing subrogation cases to court, it might opt to recoup its expenses by raising your premiums and call it a day. On the other hand, if it has a capable legal team and pursues those cases aggressively, it is acting both in its own interests and in yours. If all is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent culpable), you'll typically get $500 back, based on the laws in most states.
In addition, if the total loss 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 workers comp lawyer Paddock Lake, WI, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurers are not created equal. When comparing, it's worth contrasting the records of competing agencies to find out if they pursue valid subrogation claims; if they do so with some expediency; if they keep their clients posted as the case continues; and if they then process successfully won reimbursements immediately so that you can get your money back and move on with your life. If, instead, an insurance company has a record of honoring claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you'll feel the sting later.