Subrogation is a term that's understood in insurance and legal circles but sometimes not by the people who hire them. Even if you've never heard the word before, it would be in your benefit to comprehend an overview of how it works. The more you know about it, the more likely relevant proceedings will work out in your favor.
An insurance policy you own is a promise that, if something bad occurs, the business that insures the policy will make restitutions in one way or another in a timely manner. If your vehicle is in a fender-bender, insurance adjusters (and the judicial system, when necessary) decide who was to blame and that person's insurance covers the damages.
But since ascertaining who is financially accountable for services or repairs is usually a confusing affair – and time spent waiting often increases the damage to the policyholder – insurance firms often decide to pay up front and assign blame later. They then need a way to recoup the costs if, when all the facts are laid out, they weren't in charge of the payout.
Let's Look at an Example
You go to the emergency room with a sliced-open finger. You give the nurse your medical insurance card and she records your coverage information. You get taken care of and your insurer is billed for the medical care. But on the following day, when you arrive at work – where the injury occurred – you are given workers compensation forms to fill out. Your workers comp policy is actually responsible for the costs, not your medical insurance company. The latter has an interest in recovering its money 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. Usually, only you can sue for damages done to your person or property. But under subrogation law, your insurer is extended 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.
How Does This Affect Me?
For starters, if you have a deductible, your insurer wasn't the only one who 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 lax about bringing subrogation cases to court, it might opt to recoup its losses by upping your premiums. On the other hand, if it has a knowledgeable legal team and goes after those cases aggressively, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent responsible), you'll typically get half your deductible back, depending on your state laws.
Additionally, 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 insurance claim lawyers Tacoma, WA, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurers are not the same. When comparing, it's worth comparing the records of competing companies to evaluate if they pursue legitimate subrogation claims; if they do so without dragging their feet; if they keep their customers apprised as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, instead, an insurer has a record of paying out claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.