Subrogation is a concept that's well-known in legal and insurance circles but often not by the people who hire them. Even if you've never heard the word before, it is to your advantage to comprehend the steps of the process. The more information you have, the more likely an insurance lawsuit will work out in your favor.
Every insurance policy you own is a commitment that, if something bad happens to you, the firm that insures the policy will make good in one way or another without unreasonable delay. If your property is robbed, your property insurance steps in to pay you or enable the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is typically a confusing affair – and delay in some cases increases the damage to the policyholder – insurance companies usually decide to pay up front and figure out the blame later. They then need a way to regain the costs if, ultimately, they weren't responsible for the expense.
Can You Give an Example?
You rush into the Instacare with a deeply cut finger. You give the nurse your medical insurance card and she takes down your coverage information. You get taken care of and your insurer is billed for the services. But the next afternoon, when you get to your workplace – where the injury occurred – you are given workers compensation paperwork to file. Your workers comp policy is actually responsible for the expenses, not your medical insurance company. 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 when it pays out a claim that turned out not to be its responsibility. Some companies 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 extended some of your rights for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Does This Matter to Me?
For a start, if you have 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 – namely, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recoup its losses by boosting your premiums. On the other hand, if it knows which cases it is owed and goes after 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 expense of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as workers comp attorney Essex MD, pursue subrogation and wins, it will recover your costs in addition to its own.
All insurance agencies are not created equal. When comparing, it's worth comparing the reputations of competing companies to evaluate whether they pursue valid subrogation claims; if they resolve those claims in a reasonable amount of time; 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 losses back and move on with your life. If, instead, an insurer has a reputation of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, you should keep looking.