Subrogation and How It Affects You

Subrogation is an idea that's well-known in insurance and legal circles but sometimes not by the people they represent. Rather than leave it to the professionals, it would be to your advantage to understand an overview of how it works. The more information you have, the more likely it is that relevant proceedings will work out favorably.

Every insurance policy you own is an assurance that, if something bad happens to you, the business on the other end of the policy will make good in a timely manner. If you get hurt while you're on the clock, your employer's workers compensation agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.

But since figuring out who is financially accountable for services or repairs is typically a confusing affair – and delay sometimes adds to the damage to the victim – insurance companies in many cases opt to pay up front and assign blame after the fact. They then need a mechanism to recover the costs if, in the end, they weren't in charge of the payout.

For Example

You go to the doctor's office with a gouged finger. You give the nurse your health insurance card and she takes down your plan information. You get taken care of and your insurer gets a bill for the tab. But on the following afternoon, when you get to your place of employment – where the injury occurred – you are given workers compensation paperwork to fill out. Your workers comp policy is in fact responsible for the invoice, not your health insurance policy. The latter has a right to recover its costs somehow.

How Does Subrogation Work?

This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. 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 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.

How Does This Affect Policyholders?

For starters, if your insurance policy stipulated a deductible, it wasn't just your insurer who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to recoup its costs by raising your premiums. On the other hand, if it knows which cases it is owed and pursues those cases enthusiastically, it is acting both in its own interests and in yours. 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 accountable), you'll typically get half your deductible back, based on the laws in most states.

Moreover, if the total cost of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as Wrongful death attorney Bonney Lake, Wa, pursue subrogation and wins, it will recover your losses as well as its own.

All insurance agencies are not the same. When comparing, it's worth examining the reputations of competing agencies to find out if they pursue winnable subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their policyholders posted as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, on the other hand, an insurance agency has a reputation of honoring claims that aren't its responsibility and then covering its profit margin by raising your premiums, you'll feel the sting later.