Subrogation is a term that's well-known in legal and insurance circles but sometimes not by the policyholders they represent. Rather than leave it to the professionals, it would be in your benefit to understand the steps of how it works. The more you know about it, the more likely it is that relevant proceedings will work out favorably.
An insurance policy you hold is a promise that, if something bad happens to you, the business that covers the policy will make good in one way or another without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and police, when necessary) decide who was at fault and that party's insurance covers the damages.
But since determining who is financially accountable for services or repairs is regularly a confusing affair – and delay sometimes increases the damage to the victim – insurance firms often opt to pay up front and assign blame after the fact. They then need a path to recover the costs if, in the end, they weren't actually in charge of the expense.
Let's Look at an Example
You arrive at the emergency room with a gouged finger. You hand the nurse your health insurance card and she writes down your coverage information. You get stitches and your insurer gets an invoice for the tab. But on the following day, when you get to your place of employment – where the injury occurred – your boss hands you workers compensation paperwork to file. Your company's workers comp policy is in fact responsible for the bill, not your health insurance company. It has a vested interest in getting that money back somehow.
How Subrogation Works
This is where subrogation comes in. It is the way 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 self or property. But under subrogation law, your insurer is extended some of your rights 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.
How Does This Affect the Insured?
For a start, if you have a deductible, it wasn't just your insurer who 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 insurer is timid on any subrogation case it might not win, it might choose to get back its losses by upping your premiums and call it a day. On the other hand, if it has a capable legal team and pursues them aggressively, it is doing you a favor as well as itself. If all 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 accountable), you'll typically get $500 back, depending on your state laws.
Additionally, if the total loss 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 workers compensation lawyers Pasadena MD, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurance companies are not the same. When shopping around, it's worth looking up the records of competing firms to determine if they pursue winnable subrogation claims; if they do so with some expediency; if they keep their clients posted as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, on the other hand, an insurer has a reputation of honoring claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you should keep looking.