Subrogation is an idea that's well-known among legal and insurance companies but sometimes not by the customers they represent. Even if you've never heard the word before, it is in your self-interest to understand an overview of the process. The more you know, the better decisions you can make with regard to your insurance policy.
Any insurance policy you hold is a commitment that, if something bad occurs, the company on the other end of the policy will make good in one way or another in a timely fashion. If your home is robbed, for example, your property insurance steps in to remunerate you or pay for the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is often a confusing affair – and time spent waiting often compounds the damage to the victim – insurance firms in many cases opt to pay up front and assign blame after the fact. They then need a method to regain the costs if, when all the facts are laid out, they weren't actually responsible for the expense.
Let's Look at an Example
You go to the emergency room with a sliced-open finger. You hand the nurse your health insurance card and he takes down your policy information. You get stitches and your insurance company gets an invoice for the services. But the next afternoon, when you clock in at your place of employment – where the injury happened – your boss hands you workers compensation paperwork to turn in. Your employer's workers comp policy is in fact responsible for the costs, not your health insurance policy. It has a vested interest in getting that money back in some way.
How Does Subrogation Work?
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 to your self or property. But under subrogation law, your insurance company is extended some of your rights for having taken care of the damages. It can go after the money that was originally due to you, because it has covered the amount already.
Why Does This Matter to Me?
For a start, 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 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 costs by boosting your premiums. On the other hand, if it knows which cases it is owed and pursues those cases enthusiastically, it is doing you a favor as well as itself. If all of the money 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 accountable), you'll typically get $500 back, depending on your state laws.
Furthermore, if the total expense 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 auto accident injury lawyer Middle River MD, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurers are not created equal. When comparing, it's worth weighing the records of competing companies to find out if they pursue legitimate subrogation claims; if they resolve those claims in a reasonable amount of time; 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 insurance firm has a record of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, you'll feel the sting later.