Subrogation is an idea that's understood among insurance and legal professionals but often not by the policyholders who hire them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be to your advantage to understand an overview of how it works. The more knowledgeable you are, 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 insurer of the policy will make restitutions in one way or another in a timely fashion. If your property is robbed, for example, your property insurance agrees to remunerate you or facilitate the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is often a time-consuming 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 way to recover the costs if, when there is time to look at all the facts, they weren't actually responsible for the payout.
Can You Give an Example?
You head to the hospital with a gouged finger. You give the nurse your medical insurance card and he records your plan details. You get stitched up and your insurer gets a bill for the expenses. But the next afternoon, when you get to your workplace – where the accident happened – you are given workers compensation paperwork to fill out. Your workers comp policy is in fact responsible for the expenses, not your medical insurance company. 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 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. Under ordinary circumstances, 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.
Why Do I Need to Know This?
For one thing, 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 lost some money too – to the tune of $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to recover its expenses by boosting 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 of the money is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found one-half responsible), you'll typically get $500 back, based on the laws in most states.
Additionally, if the total expense of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as auto accident attorney Middle River MD, pursue subrogation and wins, it will recover your costs in addition to its own.
All insurers are not the same. When comparing, it's worth looking up the records of competing agencies to determine if they pursue legitimate subrogation claims; if they do so without delay; if they keep their customers advised as the case proceeds; 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, on the other hand, an insurance company has a reputation of paying out claims that aren't its responsibility and then covering its profit margin by raising your premiums, you'll feel the sting later.