Subrogation is a term that's understood in insurance and legal circles but sometimes not by the people they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your benefit to know the steps of the process. The more information you have about it, the better decisions you can make about your insurance policy.
Any insurance policy you have is an assurance that, if something bad happens to you, the business on the other end of the policy will make good in one way or another without unreasonable delay. If you get hurt while working, your employer's workers compensation insurance pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially responsible for services or repairs is sometimes a confusing affair – and time spent waiting in some cases increases the damage to the policyholder – insurance companies in many cases opt to pay up front and assign blame later. They then need a way to recoup the costs if, in the end, they weren't responsible for the expense.
Can You Give an Example?
You arrive at the hospital with a gouged finger. You hand the nurse your health insurance card and she takes down your plan details. You get stitches and your insurance company gets a bill for the services. But the next afternoon, when you arrive at your place of employment – where the accident happened – you are given workers compensation paperwork to turn in. Your workers comp policy is in fact responsible for the invoice, not your health insurance. It has a vested interest in getting that money back in some way.
How Subrogation Works
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. 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 having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Should I Care?
For a start, if you have 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 expenses by raising your premiums. On the other hand, if it knows which cases it is owed and goes after those cases enthusiastically, it is acting both in its own interests and in yours. If all $10,000 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 culpable), you'll typically get half your deductible back, depending on the laws in your state.
Furthermore, if the total loss of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as personal injury lawyers Ontario, successfully press a subrogation case, it will recover your losses as well as its own.
All insurers are not created equal. When shopping around, it's worth looking at the records of competing firms to find out whether they pursue valid subrogation claims; if they resolve those claims fast; if they keep their clients informed as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, instead, an insurer has a record of paying out claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.