Subrogation is a concept that's well-known in legal and insurance circles but rarely by the people they represent. Even if you've never heard the word before, it would be to your advantage to know the steps of the process. The more knowledgeable you are, the more likely it is that relevant proceedings will work out favorably.
An insurance policy you own is a commitment that, if something bad occurs, the firm on the other end of the policy will make restitutions in one way or another in a timely fashion. If your house is burglarized, your property insurance agrees to remunerate you or pay for the repairs, subject to state property damage laws.
But since determining who is financially accountable for services or repairs is sometimes a time-consuming affair – and time spent waiting sometimes compounds the damage to the victim – insurance companies often decide to pay up front and figure out the blame after the fact. They then need a way to recover the costs if, when all the facts are laid out, they weren't actually responsible for the payout.
Let's Look at an Example
You arrive at the hospital with a gouged finger. You hand the nurse your medical insurance card and she records your plan information. You get stitched up and your insurance company gets an invoice for the expenses. But the next morning, when you arrive at your place of employment – where the injury happened – your boss hands you workers compensation paperwork to turn in. Your workers comp policy is actually responsible for the payout, not your medical insurance. The latter has an interest in recovering its costs in some way.
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement 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. Ordinarily, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is considered to have some of your rights in exchange for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Does This Matter to Me?
For one thing, if you have a deductible, it wasn't just your insurance company that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – namely, $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to recoup its expenses by raising your premiums. On the other hand, if it knows which cases it is owed and pursues them efficiently, it is doing you a favor as well as itself. If all ten grand 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 at fault), you'll typically get $500 back, depending on the laws in your state.
Furthermore, 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 attorneys lacey wa, 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 reputations of competing firms to evaluate if they pursue valid subrogation claims; if they do so quickly; if they keep their clients posted as the case continues; and if they then process successfully won reimbursements immediately so that you can get your deductible 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 covering its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.