Subrogation and How It Affects Your Insurance
Subrogation is a term that's well-known among insurance and legal companies but often not by the people 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 the nuances of the process. The more knowledgeable you are, the more likely relevant proceedings will work out in your favor.
An insurance policy you own is a commitment that, if something bad occurs, the business on the other end of the policy will make good without unreasonable delay. If your vehicle is hit, insurance adjusters (and the courts, when necessary) determine who was at fault and that party's insurance pays out.
But since determining who is financially accountable for services or repairs is sometimes a heavily involved affair – and delay sometimes increases the damage to the victim – insurance companies often opt to pay up front and assign blame later. They then need a mechanism to get back the costs if, ultimately, they weren't in charge of the payout.
Let's Look at an Example
You arrive at the emergency room with a gouged finger. You hand the nurse your health insurance card and he writes down your plan information. You get taken care of and your insurance company gets an invoice for the medical care. But on the following morning, when you get to your place of employment – where the accident occurred – your boss hands you workers compensation paperwork to turn in. Your company's workers comp policy is actually responsible for the expenses, not your health 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 process that an insurance company uses to claim reimbursement after it has paid for something that should have been paid by some other entity. Some insurance firms 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 self or property. But under subrogation law, your insurance company is given some of your rights in exchange for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Me?
For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurance company that 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 lax about bringing subrogation cases to court, it might opt to recoup its costs by upping your premiums. On the other hand, if it has a knowledgeable legal team and goes after them enthusiastically, it is doing you a favor as well as itself. If all of the money is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half to blame), you'll typically get half your deductible back, depending on the laws in your state.
Moreover, if the total loss of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as divorce attorney 23294, pursue subrogation and succeeds, it will recover your losses in addition to its own.
All insurance companies are not the same. When shopping around, it's worth contrasting the records of competing companies to evaluate if they pursue winnable subrogation claims; if they resolve those claims without dragging their feet; if they keep their accountholders advised 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, on the other hand, an insurer has a record of honoring claims that aren't its responsibility and then protecting its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.