Subrogation is an idea that's well-known among insurance and legal companies but sometimes not by the policyholders who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is to your advantage to know the nuances of the process. The more you know, the better decisions you can make about your insurance policy.
Every insurance policy you have is a promise that, if something bad occurs, the business that insures the policy will make good in a timely fashion. If you get an injury while you're on the clock, for instance, your company's workers compensation insurance pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially accountable for services or repairs is often a confusing affair – and time spent waiting sometimes increases the damage to the victim – insurance companies often opt to pay up front and assign blame afterward. They then need a means to recoup the costs if, when all the facts are laid out, they weren't in charge of the payout.
Can You Give an Example?
You head to the emergency room with a sliced-open finger. You give the receptionist your health insurance card and he records your coverage information. You get stitched up and your insurance company is billed for the medical care. But on the following afternoon, when you clock in at your place of employment – where the accident happened – you are given workers compensation paperwork to fill out. Your workers comp policy is actually responsible for the payout, not your health insurance. 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 method 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 to your self or property. But under subrogation law, your insurance company is considered to have some of your rights in exchange for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Policyholders?
For one thing, if your insurance policy stipulated a deductible, your insurance company wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to recoup its costs by boosting your premiums and call it a day. On the other hand, if it has a capable legal team and pursues those cases aggressively, it is acting both in its own interests and in yours. If all $10,000 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 responsible), you'll typically get half your deductible back, depending on the laws in your state.
Moreover, 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 spendy. If your insurance company or its property damage lawyers, such as workman's comp insurance Manassas, VA, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance companies are not created equal. When comparing, it's worth looking at the records of competing agencies to determine if they pursue legitimate subrogation claims; if they do so without delay; if they keep their policyholders updated as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, on the other hand, an insurance agency has a record of paying out claims that aren't its responsibility and then covering its income by raising your premiums, you should keep looking.