Subrogation and How It Affects Your Insurance

Subrogation is an idea that's well-known in insurance and legal circles but sometimes not by the policyholders they represent. Even if you've never heard the word before, it is in your self-interest to comprehend the steps of how it works. The more information you have, the more likely it is that relevant proceedings will work out favorably.

An insurance policy you hold is an assurance that, if something bad occurs, the business that covers the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and the judicial system, when necessary) determine who was to blame and that party's insurance covers the damages.

But since determining who is financially accountable for services or repairs is typically a tedious, lengthy affair – and delay sometimes adds to the damage to the policyholder – insurance firms in many cases opt to pay up front and assign blame after the fact. They then need a method to get back the costs if, when all is said and done, they weren't actually in charge of the expense.

Can You Give an Example?

You head to the emergency room with a gouged finger. You give the nurse your medical insurance card and he writes down your policy details. You get stitched up and your insurer is billed for the services. But the next afternoon, when you clock in at your workplace – where the accident happened – you are given workers compensation forms to file. Your company's workers comp policy is in fact responsible for the bill, not your medical insurance policy. 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 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 companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurer is extended 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 the Insured?

For starters, if your insurance policy stipulated a deductible, it wasn't just your insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to be precise, $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to get back its costs by raising your premiums and call it a day. On the other hand, if it has a proficient legal team and pursues those cases enthusiastically, it is doing you a favor as well as itself. If all ten grand 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 $500 back, depending on the laws in your state.

In addition, if the total expense 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 workers compensation lawyers Reisterstown MD, pursue subrogation and wins, it will recover your expenses as well as its own.

All insurers are not the same. When shopping around, it's worth examining the records of competing firms to find out whether they pursue legitimate subrogation claims; if they do so in a reasonable amount of time; if they keep their policyholders posted 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, instead, an insurance company has a reputation 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.

[Top]