Subrogation is a concept that's well-known among legal and insurance firms but often not by the customers who hire them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your benefit to know an overview of how it works. The more information you have, the better decisions you can make with regard to your insurance policy.
An insurance policy you have is a commitment that, if something bad occurs, the insurer of the policy will make restitutions without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and the judicial system, when necessary) decide who was at fault and that party's insurance pays out.
But since determining who is financially accountable for services or repairs is regularly a confusing affair – and time spent waiting in some cases increases the damage to the policyholder – insurance companies usually opt to pay up front and figure out the blame afterward. They then need a method to regain the costs if, once the situation is fully assessed, they weren't actually in charge of the expense.
Let's Look at an Example
You arrive at the Instacare with a sliced-open finger. You give the nurse your health insurance card and he takes down your coverage information. You get taken care of and your insurance company gets an invoice for the services. But on the following morning, when you clock in at your place of employment – where the accident occurred – your boss hands you workers compensation forms to fill out. Your employer's workers comp policy is in fact responsible for the payout, not your health insurance company. The latter has a right to recover its money somehow.
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. Usually, only you can sue for damages done 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 that was originally due to you, because it has covered the amount already.
How Does This Affect the Insured?
For starters, if your insurance policy stipulated a deductible, your insurance company wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to recover its losses by upping your premiums. On the other hand, if it has a proficient legal team and pursues those cases efficiently, it is doing you a favor as well as itself. If all $10,000 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 culpable), you'll typically get half your deductible back, depending on the laws in your state.
Moreover, if the total cost of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as criminal defense lawyer american fork ut, pursue subrogation and succeeds, it will recover your expenses in addition to its own.
All insurance companies are not the same. When shopping around, it's worth scrutinizing the reputations of competing companies to find out whether they pursue legitimate subrogation claims; if they resolve those claims quickly; if they keep their accountholders posted as the case goes on; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, instead, an insurance agency has a record of honoring claims that aren't its responsibility and then covering its income by raising your premiums, you should keep looking.