Subrogation is a concept that's well-known in insurance and legal circles but rarely by the customers they represent. Even if you've never heard the word before, it is in your benefit to understand an overview of the process. The more information you have about it, the better decisions you can make with regard to your insurance policy.
Every insurance policy you have is a promise that, if something bad happens to you, the insurer of the policy will make restitutions in one way or another in a timely manner. If your vehicle is hit, insurance adjusters (and the courts, when necessary) decide who was at fault and that person's insurance covers the damages.
But since ascertaining who is financially accountable for services or repairs is typically a tedious, lengthy affair – and time spent waiting often adds to the damage to the policyholder – insurance companies often opt to pay up front and assign blame afterward. They then need a mechanism to get back the costs if, when all is said and done, they weren't in charge of the payout.
Let's Look at an Example
You arrive at the doctor's office with a gouged finger. You hand the receptionist your health insurance card and he writes down your policy details. You get taken care of and your insurance company gets a bill for the tab. But on the following day, when you get to your place of employment – where the accident happened – your boss hands you workers compensation forms to turn in. Your company's workers comp policy is in fact responsible for the invoice, not your health insurance company. It has a vested interest in getting that money back somehow.
How Does Subrogation Work?
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. Under ordinary circumstances, only you can sue for damages to your self or property. But under subrogation law, your insurance company is extended 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.
Why Do I Need to Know This?
For a start, if your insurance policy stipulated a deductible, your insurance company wasn't the only one 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 lax about bringing subrogation cases to court, it might choose to recoup its losses by upping your premiums. On the other hand, if it knows which cases it is owed and goes after 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 deductible back. If it recovers half (for instance, in a case where you are found 50 percent 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 over your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as Criminal defense taylorsville ut, pursue subrogation and succeeds, it will recover your expenses in addition to its own.
All insurance agencies are not the same. When shopping around, it's worth looking at the reputations of competing companies to determine whether they pursue winnable subrogation claims; if they resolve those claims with some expediency; if they keep their clients updated as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, instead, an insurance agency has a record of honoring claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.