Subrogation is a term that's understood in legal and insurance circles but often not by the policyholders who employ them. Rather than leave it to the professionals, it is to your advantage to understand the nuances of how it works. The more information you have about it, the more likely an insurance lawsuit will work out in your favor.
An insurance policy you hold is an assurance that, if something bad occurs, the company that insures the policy will make restitutions in one way or another without unreasonable delay. If you get injured on the job, your company's workers compensation insurance pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially accountable for services or repairs is sometimes a tedious, lengthy affair – and delay in some cases compounds the damage to the victim – insurance companies in many cases opt to pay up front and figure out the blame afterward. They then need a path to recover the costs if, when all the facts are laid out, they weren't in charge of the payout.
For Example
You go to the Instacare with a deeply cut finger. You hand the nurse your health insurance card and he takes down your coverage information. You get taken care of and your insurance company gets an invoice for the expenses. But the next day, when you arrive at your workplace – where the accident occurred – your boss hands you workers compensation forms to file. Your company's workers comp policy is in fact responsible for the expenses, not your health insurance. The latter has a right to recover its costs somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the method 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. Normally, only you can sue for damages to your self or property. But under subrogation law, your insurance company is given some of your rights in exchange for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Does This Matter to Me?
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 – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to recoup its expenses by ballooning 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 thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half to blame), you'll typically get $500 back, based on the laws in most states.
Moreover, if the total loss 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 medical malpractice 95037, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurance agencies are not the same. When comparing, it's worth examining the reputations of competing firms to find out whether they pursue winnable subrogation claims; if they do so with some expediency; if they keep their accountholders advised as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, instead, an insurance firm has a reputation of paying out claims that aren't its responsibility and then covering its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.