Subrogation is a concept that's well-known in insurance and legal circles but sometimes not by the people who hire them. Even if you've never heard the word before, it would be in your self-interest to know the nuances of how it works. The more knowledgeable you are, the more likely it is that an insurance lawsuit will work out favorably.
Every 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 fashion. If your vehicle is rear-ended, insurance adjusters (and the judicial system, when necessary) determine who was to blame and that party's insurance pays out.
But since figuring out who is financially responsible for services or repairs is often a time-consuming affair – and delay sometimes compounds the damage to the policyholder – insurance firms in many cases decide to pay up front and figure out the blame after the fact. They then need a method to recoup the costs if, when all is said and done, they weren't responsible for the expense.
Let's Look at an Example
You go to the emergency room with a gouged finger. You give the nurse your medical insurance card and he writes down your policy information. You get stitches and your insurance company gets an invoice for the tab. But on the following afternoon, when you arrive at your place of employment – where the accident happened – your boss hands you workers compensation forms to file. Your company's workers comp policy is actually responsible for the payout, not your medical insurance policy. The latter has a right to recover its costs in some way.
How Does Subrogation Work?
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 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 person or property. But under subrogation law, your insurance company is given 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.
How Does This Affect Policyholders?
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 insurer is timid on any subrogation case it might not win, it might choose to recover its expenses by boosting your premiums and call it a day. On the other hand, if it has a capable legal team and goes after them enthusiastically, it is doing you a favor as well as itself. 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 at fault), you'll typically get $500 back, depending on your state laws.
Additionally, if the total expense of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as animal attack lawyer salt lake city ut, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurance agencies are not created equal. When shopping around, it's worth weighing the records of competing companies to determine whether they pursue winnable subrogation claims; if they resolve those claims without delay; if they keep their policyholders advised as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, on the other hand, an insurance agency has a record of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, you'll feel the sting later.