Subrogation is a concept that's well-known among insurance and legal firms but sometimes not by the people they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your benefit to know an overview of how it works. The more information you have, the better decisions you can make with regard to your insurance policy.
Every insurance policy you hold is a promise that, if something bad occurs, the company on the other end of the policy will make restitutions in a timely manner. If your vehicle is in a fender-bender, insurance adjusters (and police, when necessary) determine who was at fault and that party's insurance covers the damages.
But since figuring out who is financially responsible for services or repairs is usually a heavily involved affair – and delay often increases the damage to the policyholder – insurance firms usually opt to pay up front and figure out the blame afterward. They then need a method to recover the costs if, once the situation is fully assessed, they weren't responsible for the payout.
Can You Give an Example?
You arrive at the Instacare with a sliced-open finger. You hand the nurse your medical insurance card and he records your policy details. You get taken care of and your insurance company gets an invoice for the medical care. But on the following morning, when you get to your workplace – where the injury happened – you are given workers compensation forms to fill out. Your employer's workers comp policy is in fact responsible for the expenses, not your medical 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 process 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. Normally, only you can sue for damages to your person or property. But under subrogation law, your insurance company 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.
How Does This Affect the Insured?
For starters, if you have a deductible, your insurance company 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 – to be precise, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to recoup its costs by increasing 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 deductible back. If it recovers half (for instance, in a case where you are found 50 percent responsible), you'll typically get $500 back, based on the laws in most states.
Furthermore, if the total cost 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 personal injury lawyers glen burnie, md, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurance agencies are not the same. When shopping around, it's worth looking up the records of competing agencies to find out if they pursue winnable subrogation claims; if they do so fast; if they keep their customers informed as the case continues; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, on the other hand, an insurance company has a record of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, you should keep looking.