Subrogation is a concept that's well-known in legal and insurance circles but often not by the people they represent. Even if it sounds complicated, it would be in your self-interest to know an overview of how it works. The more knowledgeable you are about it, the more likely an insurance lawsuit will work out favorably.
Any insurance policy you hold is an assurance that, if something bad happens to you, the insurer of the policy will make good in one way or another in a timely manner. If you get hurt on the job, your employer's workers compensation pays out 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 typically a heavily involved affair – and time spent waiting often increases the damage to the victim – insurance firms in many cases opt to pay up front and figure out the blame later. They then need a way to regain the costs if, when all is said and done, they weren't in charge of the payout.
Let's Look at an Example
You arrive at the doctor's office with a deeply cut finger. You give the nurse your health insurance card and he takes down your plan information. You get stitches and your insurance company is billed for the medical care. But the next afternoon, when you arrive at your place of employment – where the injury occurred – you are given workers compensation paperwork to turn in. Your workers comp policy is actually responsible for the expenses, not your health insurance company. The latter has a right to recover its money in some way.
How Does Subrogation Work?
This is where subrogation comes in. It is the way 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. Ordinarily, only you can sue for damages to your person or property. But under subrogation law, your insurance company is considered to have some of your rights in exchange for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Do I Need to Know This?
For starters, if your insurance policy stipulated 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 timid on any subrogation case it might not win, it might opt to recoup its expenses by ballooning your premiums. On the other hand, if it knows which cases it is owed and pursues those cases efficiently, 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 50 percent accountable), you'll typically get half your deductible back, depending on your state laws.
Moreover, if the total price 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 Law office near bonney lake washington, successfully press a subrogation case, it will recover your losses as well as its own.
All insurers are not the same. When comparing, it's worth looking at the records of competing agencies to find out if they pursue valid subrogation claims; if they do so quickly; if they keep their accountholders advised as the case proceeds; 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, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then covering its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.