Subrogation is a concept that's well-known in legal and insurance circles but rarely by the customers who employ them. Even if it sounds complicated, it would be in your benefit to understand an overview of the process. The more knowledgeable you are, the more likely an insurance lawsuit will work out in your favor.
Every insurance policy you have is a promise that, if something bad happens to you, the insurer of the policy will make good in one way or another in a timely fashion. If your vehicle is rear-ended, insurance adjusters (and the courts, when necessary) decide who was at fault and that person's insurance pays out.
But since ascertaining who is financially accountable for services or repairs is often a time-consuming affair – and delay often compounds the damage to the victim – insurance firms in many cases opt to pay up front and assign blame after the fact. They then need a mechanism to recoup the costs if, when there is time to look at all the facts, they weren't responsible for the expense.
Let's Look at an Example
You head to the emergency room with a deeply cut finger. You hand the nurse your health insurance card and he takes down your coverage information. You get taken care of and your insurer gets an invoice for the services. But on the following afternoon, when you get to your workplace – where the accident happened – you are given workers compensation paperwork to fill out. Your employer's workers comp policy is actually responsible for the expenses, not your health insurance. It has a vested interest in getting that money back 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 insurance firms have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Usually, only you can sue for damages to your self or property. But under subrogation law, your insurer is considered to have 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 Do I Need to Know This?
For starters, if you have a deductible, your insurer wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to recoup its losses by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them enthusiastically, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half responsible), you'll typically get $500 back, based on the laws in most states.
Furthermore, if the total loss 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 criminal defense attorney Spanish Fork UT, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurance companies are not the same. When shopping around, it's worth measuring the reputations of competing firms to evaluate whether they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their accountholders apprised as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, on the other hand, an insurance company has a reputation of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you should keep looking.