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 the steps of how it works. The more you know about it, the better decisions you can make about your insurance company.
Any insurance policy you own is a promise that, if something bad occurs, the insurer of the policy will make good without unreasonable delay. If you get hurt at work, for example, your company's workers compensation agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially accountable for services or repairs is typically a time-consuming affair – and delay sometimes increases the damage to the policyholder – insurance firms often decide to pay up front and assign blame later. They then need a method to recoup the costs if, when there is time to look at all the facts, they weren't responsible for the expense.
You head to the Instacare with a deeply cut finger. You give the nurse your health insurance card and she takes down your plan information. You get stitched up and your insurance company gets an invoice for the expenses. But the next morning, when you get to your workplace – where the injury happened – your boss hands you workers compensation paperwork to fill out. Your workers comp policy is actually responsible for the payout, not your health insurance company. The latter has an interest in recovering its money somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the process 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. Under ordinary circumstances, only you can sue for damages to your person or property. But under subrogation law, your insurance company is considered to have some of your rights in exchange for having taken care of the damages. It can go after the money that was originally due to you, because it has covered the amount already.
Why Should I Care?
For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurance company that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to the tune of $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to get back its losses by raising your premiums. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is doing you a favor as well as itself. 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, depending on your state laws.
Furthermore, if the total price of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as how do i find a real estate lawyer Lake Geneva, WI, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurance companies are not created equal. When comparing, it's worth looking at the records of competing companies to evaluate if they pursue winnable subrogation claims; if they resolve those claims with some expediency; if they keep their accountholders posted as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, on the other hand, an insurer has a reputation of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, you should keep looking.