Subrogation is an idea that's understood among insurance and legal companies but rarely by the policyholders who hire them. Rather than leave it to the professionals, it is to your advantage to know an overview of the process. The more you know, the more likely it is that an insurance lawsuit will work out favorably.
Any insurance policy you hold is a commitment that, if something bad occurs, the insurer of the policy will make good in one way or another in a timely manner. If your home is broken into, your property insurance steps in to compensate you or facilitate the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is often a tedious, lengthy affair – and delay sometimes compounds the damage to the victim – insurance firms usually opt to pay up front and assign blame afterward. They then need a path to regain the costs if, ultimately, they weren't in charge of the payout.
Let's Look at an Example
You rush into the emergency room with a sliced-open finger. You hand the receptionist your health insurance card and she writes down your coverage information. You get stitched up and your insurer is billed for the medical care. But the next morning, when you clock in at your workplace – where the accident occurred – your boss hands you workers compensation forms to file. Your employer's workers comp policy is actually responsible for the costs, not your health insurance policy. The latter has an interest in recovering its costs in some way.
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 insurance firms have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurer 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.
Why Do I Need to Know This?
For starters, if you have a deductible, it wasn't just your insurer who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to be precise, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recoup its losses by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them aggressively, it is acting both in its own interests and in yours. If all ten grand 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 to blame), you'll typically get half your deductible back, based on the laws in most states.
Furthermore, 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 personal injury legal assistance Tacoma Wa, pursue subrogation and succeeds, it will recover your costs in addition to its own.
All insurers are not the same. When shopping around, it's worth weighing the reputations of competing agencies to find out if they pursue winnable subrogation claims; if they do so quickly; if they keep their accountholders informed as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, on the other hand, an insurance agency has a record of honoring claims that aren't its responsibility and then covering its profit margin by raising your premiums, you'll feel the sting later.