Subrogation is a term that's well-known in legal and insurance circles but often not by the customers they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your benefit to know an overview of how it works. The more information you have, the more likely it is that an insurance lawsuit will work out favorably.
An insurance policy you have is a commitment that, if something bad happens to you, the business on the other end of the policy will make good in one way or another in a timely fashion. If you get an injury while working, your employer's workers compensation insurance picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially responsible for services or repairs is sometimes a tedious, lengthy affair – and time spent waiting in some cases compounds the damage to the policyholder – insurance firms usually decide to pay up front and assign blame after the fact. They then need a mechanism to recover the costs if, when all is said and done, they weren't in charge of the expense.
Let's Look at an Example
You arrive at the Instacare with a deeply cut finger. You give the nurse your medical insurance card and he writes down your policy details. You get stitched up and your insurer gets an invoice for the tab. But on the following morning, when you arrive at your place of employment – where the accident happened – your boss hands you workers compensation paperwork to fill out. Your company's workers comp policy is in fact responsible for the expenses, not your medical 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 process that an insurance company uses to claim payment after it has paid for something that should have been paid by some other entity. Some companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Ordinarily, only you can sue for damages done to your self or property. But under subrogation law, your insurer is given 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 insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to get back its costs by increasing your premiums. On the other hand, if it knows which cases it is owed and goes after those cases enthusiastically, it is doing you a favor as well as itself. 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 50 percent accountable), you'll typically get $500 back, depending on your state laws.
In addition, if the total price 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 personal injury attorney glen burnie md, pursue subrogation and wins, it will recover your losses as well as its own.
All insurers are not the same. When comparing, it's worth scrutinizing the reputations of competing firms to evaluate whether they pursue valid subrogation claims; if they resolve those claims without delay; if they keep their policyholders updated as the case goes on; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then covering its profitability by raising your premiums, you should keep looking.