Subrogation is a concept that's understood in insurance and legal circles but often not by the people who hire them. Rather than leave it to the professionals, it is in your self-interest to know the steps of the process. The more you know about it, the better decisions you can make about your insurance policy.
An insurance policy you own is a promise that, if something bad happens to you, the business that insures the policy will make good in one way or another in a timely fashion. If a hailstorm damages your home, for instance, your property insurance steps in to compensate you or facilitate the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is typically a time-consuming affair – and time spent waiting sometimes compounds the damage to the victim – insurance firms usually opt to pay up front and assign blame after the fact. They then need a mechanism to regain the costs if, in the end, they weren't in charge of the expense.
Can You Give an Example?
You arrive at the Instacare with a sliced-open finger. You hand the receptionist your health insurance card and she takes down your coverage information. You get stitched up and your insurance company gets an invoice for the medical care. But the next afternoon, when you arrive at your place of employment – where the accident happened – your boss hands you workers compensation forms to turn in. Your employer's workers comp policy is actually responsible for the hospital visit, not your health insurance. It has a vested interest in getting that money back somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the way that an insurance company uses to claim payment 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. Normally, only you can sue for damages done 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 originally due to you, because it has covered the amount already.
How Does This Affect the Insured?
For one thing, if your insurance policy stipulated 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 lost some money too – to be precise, $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to recover its losses by ballooning your premiums. On the other hand, if it has a competent legal team and goes after them enthusiastically, it is acting both in its own interests and in yours. If all of the money 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 at fault), you'll typically get $500 back, depending on the laws in your state.
Moreover, if the total expense 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 local criminal defense attorney Provo UT, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurers are not the same. When comparing, it's worth examining the records of competing firms to evaluate whether they pursue winnable subrogation claims; if they resolve those claims quickly; if they keep their clients 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 record of honoring claims that aren't its responsibility and then protecting its profitability by raising your premiums, you'll feel the sting later.
