Subrogation is a term that's understood in insurance and legal circles but rarely by the people they represent. Even if it sounds complicated, it is to your advantage to understand the nuances of how it works. The more you know about it, the more likely an insurance lawsuit will work out in your favor.
Every insurance policy you own is an assurance that, if something bad happens to you, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If you get injured on the job, for example, your employer's workers compensation insurance picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially accountable for services or repairs is often a tedious, lengthy affair – and time spent waiting sometimes compounds the damage to the policyholder – insurance firms in many cases decide to pay up front and assign blame later. They then need a means to regain the costs if, when all is said and done, they weren't actually in charge of the payout.
You arrive at the emergency room with a sliced-open finger. You give the receptionist your health insurance card and she takes down your policy information. You get taken care of and your insurer gets a bill for the tab. But on the following afternoon, when you arrive at your workplace – where the injury happened – your boss hands you workers compensation paperwork to fill out. Your workers comp policy is in fact responsible for the payout, not your health insurance company. The latter has a right to recover its money in some way.
How Does Subrogation Work?
This is where subrogation comes in. It is the process that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. 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 done to your person or property. But under subrogation law, your insurer is considered to have some of your rights in exchange 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 Me?
For starters, 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 have a stake in the outcome as well – to the tune of $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to get back its losses by increasing your premiums. On the other hand, if it knows which cases it is owed and pursues those cases enthusiastically, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found one-half at fault), you'll typically get half your deductible back, based on the laws in most states.
Moreover, 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 spendy. If your insurance company or its property damage lawyers, such as family law 66061, pursue subrogation and wins, it will recover your costs in addition to its own.
All insurance companies are not the same. When comparing, it's worth examining the reputations of competing firms to evaluate if they pursue legitimate subrogation claims; if they resolve those claims without dragging their feet; if they keep their customers updated as the case goes on; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, on the other hand, an insurance company has a record of paying out claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you'll feel the sting later.