Subrogation is an idea that's understood in legal and insurance circles but rarely by the policyholders who hire them. Even if it sounds complicated, it is in your self-interest to understand the nuances of the process. The more information you have about it, the more likely relevant proceedings will work out favorably.
Any insurance policy you own is a promise that, if something bad occurs, the insurer of the policy will make good in one way or another without unreasonable delay. If you get hurt at work, for instance, 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 responsible for services or repairs is usually a tedious, lengthy affair – and time spent waiting sometimes compounds the damage to the policyholder – insurance companies in many cases decide to pay up front and assign blame afterward. They then need a means to recover the costs if, in the end, they weren't actually in charge of the expense.
Let's Look at an Example
You arrive at the Instacare with a gouged finger. You give the nurse your health insurance card and he records your policy details. You get stitched up and your insurer gets an invoice for the services. But on the following day, when you clock in at work – where the injury occurred – you are given workers compensation forms to file. Your employer's workers comp policy is actually responsible for the hospital visit, not your health insurance company. It has a vested interest in getting that money back somehow.
How Subrogation Works
This is where subrogation comes in. It is the way 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. Usually, only you can sue for damages done to your person or property. But under subrogation law, your insurer is extended some of your rights for having taken care of 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 Individuals?
For starters, if your insurance policy stipulated a deductible, it wasn't just your insurer 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 insurer is timid on any subrogation case it might not win, it might choose to recover its expenses by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases enthusiastically, it is doing you a favor as well as itself. If all 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 culpable), you'll typically get half your deductible back, based on the laws in most states.
Furthermore, if the total cost of an accident is over 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 immigration law firm South Jordon UT, pursue subrogation and succeeds, it will recover your expenses as well as its own.
All insurance agencies are not created equal. When shopping around, it's worth comparing the reputations of competing companies to evaluate whether they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their policyholders informed as the case continues; 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 insurer has a record of honoring claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you'll feel the sting later.