Subrogation is a term that's understood in legal and insurance circles but sometimes not by the people who employ them. Rather than leave it to the professionals, it would be in your benefit to comprehend an overview of how it works. The more information you have about it, the better decisions you can make with regard to your insurance company.
Every insurance policy you have is a promise that, if something bad occurs, the company that insures the policy will make restitutions in one way or another in a timely manner. If your house is broken into, your property insurance steps in to repay you or enable the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is often a tedious, lengthy affair – and delay sometimes adds to the damage to the policyholder – insurance firms often decide to pay up front and assign blame later. They then need a mechanism to recoup the costs if, once the situation is fully assessed, they weren't in charge of the payout.
You arrive at the emergency room with a deeply cut finger. You give the nurse your medical insurance card and she writes down your coverage details. You get taken care of and your insurer gets an invoice for the services. But on the following morning, when you get to your workplace – where the injury occurred – your boss hands you workers compensation paperwork to fill out. Your workers comp policy is actually responsible for the invoice, not your medical insurance. The latter has an interest in recovering its money somehow.
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim payment 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. Ordinarily, only you can sue for damages done to your self 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 one thing, 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 – to be precise, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recoup its costs by ballooning your premiums. On the other hand, if it has a competent legal team and goes after those cases efficiently, it is acting both in its own interests and in yours. 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 50 percent to blame), you'll typically get $500 back, based on the laws in most states.
Additionally, if the total price 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 when to get a real estate lawyer Lake Geneva, WI, pursue subrogation and wins, it will recover your costs in addition to its own.
All insurers are not the same. When comparing, it's worth looking at the records of competing companies to determine whether they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their customers advised as the case continues; and if they then process successfully won reimbursements immediately so that you can get your money back and move on with your life. If, on the other hand, an insurance company has a reputation of honoring claims that aren't its responsibility and then protecting its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.