Subrogation is a term that's understood in legal and insurance circles but sometimes not by the policyholders who employ them. Even if it sounds complicated, it is to your advantage to know the steps of the process. The more you know, the more likely it is that relevant proceedings will work out in your favor.
An insurance policy you hold is an assurance that, if something bad occurs, the business on the other end of the policy will make restitutions without unreasonable delay. If your vehicle is hit, insurance adjusters (and police, when necessary) decide who was to blame and that party's insurance pays out.
But since determining who is financially accountable for services or repairs is usually a heavily involved affair – and delay in some cases increases the damage to the victim – insurance firms often decide to pay up front and figure out the blame afterward. They then need a method to recover the costs if, in the end, they weren't actually responsible for the expense.
Can You Give an Example?
You head to the doctor's office with a gouged finger. You hand the nurse your medical insurance card and she takes down your plan information. You get stitched up and your insurer is billed for the expenses. But the next morning, when you get to your workplace – where the accident happened – you are given workers compensation paperwork to fill out. Your workers comp policy is actually responsible for the expenses, not your medical 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 method 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. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurer is extended some of your rights for making good on the damages. It can go after the money that was originally due to you, because it has covered the amount already.
Why Should I Care?
For one thing, if your insurance policy stipulated a deductible, your insurer wasn't the only one 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 insurance company is lax about bringing subrogation cases to court, it might choose to recover its expenses by boosting your premiums. On the other hand, if it has a capable legal team 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 accountable), you'll typically get $500 back, based on the laws in most states.
Moreover, 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 criminal defense law Pleasant Grove UT, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance companies are not created equal. When shopping around, it's worth contrasting the records of competing agencies to find out if they pursue legitimate subrogation claims; if they resolve those claims with some expediency; if they keep their customers posted as the case goes on; and if they then process successfully won reimbursements immediately 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 profit margin by raising your premiums, you should keep looking.