Subrogation is a term that's well-known in legal and insurance circles but often not by the policyholders who employ them. Rather than leave it to the professionals, it would be in your self-interest to know the steps of the process. The more knowledgeable you are about it, the more likely relevant proceedings will work out in your favor.
Every insurance policy you hold is a commitment that, if something bad happens to you, the business on the other end of the policy will make restitution in one way or another in a timely manner. If a fire damages your home, your property insurance agrees to pay you or enable the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is sometimes a confusing affair – and time spent waiting in some cases compounds the damage to the victim – insurance companies in many cases opt to pay up front and assign blame afterward. They then need a path to recoup the costs if, when there is time to look at all the facts, they weren't in charge of the payout.
Can You Give an Example?
You head to the doctor's office with a gouged finger. You hand the receptionist your medical insurance card and she records your plan information. You get stitches and your insurance company is billed for the medical care. But on the following day, when you arrive at your place of employment – where the injury happened – you are given workers compensation forms to fill out. Your workers comp policy is actually responsible for the invoice, not your medical insurance. 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 way 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. Usually, 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 Policyholders?
For one thing, 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 timid on any subrogation case it might not win, it might opt to recover its costs by raising your premiums. On the other hand, if it knows which cases it is owed and goes after them aggressively, it is acting both in its own interests and in yours. If all ten grand is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent culpable), you'll typically get $500 back, depending on the laws in your state.
Furthermore, if the total cost of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as law firm vancouver wa, pursue subrogation and succeeds, it will recover your losses in addition to its own.
All insurers are not the same. When shopping around, it's worth scrutinizing the reputations of competing firms to find out whether they pursue valid subrogation claims; if they do so fast; if they keep their account holders updated as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, instead, an insurance agency has a reputation of honoring claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.law firm vancouver wa