Subrogation is an idea that's well-known among insurance and legal professionals but often not by the customers they represent. Even if it sounds complicated, it would be to your advantage to comprehend the nuances of how it works. The more information you have about it, the better decisions you can make with regard to your insurance policy.
An insurance policy you have is a promise that, if something bad happens to you, the insurer of the policy will make restitutions without unreasonable delay. If your vehicle is hit, insurance adjusters (and the courts, when necessary) decide who was to blame and that party's insurance pays out.
But since ascertaining who is financially responsible for services or repairs is regularly a time-consuming affair – and delay in some cases increases the damage to the victim – insurance firms usually opt to pay up front and figure out the blame later. They then need a method to get back the costs if, in the end, they weren't in charge of the payout.
Can You Give an Example?
You rush into the hospital with a sliced-open finger. You hand the nurse your medical insurance card and he records your plan information. You get stitched up and your insurer gets an invoice for the services. But on the following day, when you clock in at your place of employment – where the injury occurred – you are given workers compensation paperwork to turn in. Your company's workers comp policy is in fact responsible for the costs, not your medical insurance policy. It has a vested interest in getting that money back in some way.
How Subrogation Works
This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement 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. Usually, only you can sue for damages done to your person or property. But under subrogation law, your insurer is given 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 you have a deductible, it wasn't just your insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its losses by raising your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them aggressively, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full 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.
In addition, if the total price of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as workers comp insurance Purcellville, VA, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurers are not created equal. When comparing, it's worth looking at the records of competing companies to evaluate whether they pursue legitimate subrogation claims; if they do so quickly; if they keep their accountholders apprised as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, instead, an insurance company has a record of paying out claims that aren't its responsibility and then protecting its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.