Subrogation is a term that's understood among legal and insurance firms but sometimes not by the people they represent. Even if you've never heard the word before, it is in your self-interest to comprehend an overview of the process. The more information you have, the better decisions you can make about your insurance policy.
Any insurance policy you have is a commitment that, if something bad happens to you, the company on the other end of the policy will make good without unreasonable delay. If you get injured while working, for example, your employer's workers compensation insurance pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially accountable for services or repairs is often a confusing affair – and delay sometimes compounds the damage to the victim – insurance companies in many cases decide to pay up front and assign blame later. They then need a path to get back the costs if, when there is time to look at all the facts, they weren't actually in charge of the expense.
You arrive at the emergency room with a deeply cut finger. You hand the nurse your health insurance card and he records your plan information. You get stitched up and your insurance company gets a bill for the services. But the next day, when you clock in at your workplace – where the injury occurred – you are given workers compensation forms to turn in. Your company's workers comp policy is actually responsible for the costs, not your health insurance policy. It has a vested interest in getting that money back in some way.
How Does Subrogation Work?
This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement 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 to your self or property. But under subrogation law, your insurance company is given some of your rights 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 Policyholders?
For one thing, if you have 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 unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its expenses by increasing your premiums. On the other hand, if it knows which cases it is owed and pursues them 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 one-half responsible), you'll typically get $500 back, depending on the laws in your state.
Moreover, if the total price of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as medical malpractice lawyer Washington DC, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurance agencies are not the same. When comparing, it's worth looking up the reputations of competing companies to find out if they pursue valid subrogation claims; if they do so quickly; if they keep their customers updated as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, instead, an insurer has a reputation of paying out claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you'll feel the sting later.