Subrogation is a concept that's understood in legal and insurance circles but often not by the customers they represent. Even if you've never heard the word before, it would be in your self-interest to understand the steps of the process. The more information you have about it, the more likely an insurance lawsuit will work out in your favor.
An insurance policy you own is an assurance that, if something bad happens to you, the company on the other end of the policy will make good without unreasonable delay. If a fire damages your property, your property insurance steps in to pay you or pay for the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is often a confusing affair – and delay in some cases increases the damage to the victim – insurance firms often opt to pay up front and figure out the blame afterward. They then need a path to regain the costs if, when all is said and done, they weren't actually responsible for the payout.
Can You Give an Example?
You go to the emergency room with a deeply cut finger. You hand the nurse your health insurance card and she writes down your plan details. You get taken care of and your insurer is billed for the medical care. But the next afternoon, when you get to your place of employment – where the injury happened – your boss hands you workers compensation forms to fill out. Your employer's workers comp policy is in fact responsible for the payout, not your health insurance company. The latter has an interest in recovering its money somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the process 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. Ordinarily, only you can sue for damages to your person or property. But under subrogation law, your insurer is given some of your rights 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.
Why Does This Matter to Me?
For a start, if you have a deductible, your insurer wasn't the only one who 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 insurer is lax about bringing subrogation cases to court, it might opt to recoup its expenses by raising your premiums. On the other hand, if it knows which cases it is owed and pursues those cases efficiently, it is doing you a favor as well as itself. If all of the money 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 to blame), you'll typically get half your deductible back, depending on the laws in your state.
Furthermore, if the total price of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as lawsuit attorney salem ut, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurance companies are not created equal. When comparing, it's worth examining the reputations of competing firms to determine if they pursue legitimate subrogation claims; if they resolve those claims without delay; if they keep their clients apprised as the case continues; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you should keep looking.