Subrogation is a concept that's understood among legal and insurance professionals but rarely by the policyholders they represent. Even if it sounds complicated, it would be in your self-interest to know the steps of how it works. The more knowledgeable you are, the better decisions you can make with regard to your insurance company.
An insurance policy you hold is a promise that, if something bad happens to you, the company that covers the policy will make restitutions without unreasonable delay. If you get injured while you're on the clock, your company's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially accountable for services or repairs is regularly a confusing affair – and time spent waiting often adds to the damage to the policyholder – insurance companies in many cases opt to pay up front and figure out the blame after the fact. They then need a way to recover the costs if, when there is time to look at all the facts, they weren't actually responsible for the payout.
Can You Give an Example?
You go to the emergency room with a deeply cut finger. You hand the receptionist your health insurance card and she takes down your coverage details. You get stitches and your insurance company is billed for the medical care. But the next day, when you clock in at work – where the accident happened – your boss hands you workers compensation forms to turn in. Your company's workers comp policy is in fact responsible for the bill, not your health insurance. It has a vested interest in getting that money back somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the way that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. Some companies 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 self 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 originally due to you, because it has covered the amount already.
How Does This Affect Me?
For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurance company who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to recoup its expenses by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases efficiently, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent to blame), you'll typically get $500 back, based on the laws in most states.
Additionally, if the total price 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 wills and estate planning Racine WI, pursue subrogation and wins, it will recover your losses as well as its own.
All insurance agencies are not created equal. When comparing, it's worth looking up the reputations of competing agencies to determine if they pursue valid subrogation claims; if they do so without delay; if they keep their accountholders posted as the case continues; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.