Subrogation is an idea that's well-known among legal and insurance professionals but sometimes not by the policyholders who hire them. Even if you've never heard the word before, it would be to your advantage to understand the steps of the process. The more knowledgeable you are about it, the more likely relevant proceedings will work out favorably.
Every insurance policy you have is an assurance that, if something bad happens to you, the company on the other end of the policy will make restitutions without unreasonable delay. If you get an injury while you're on the clock, for instance, your company's workers compensation picks up the tab 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 confusing affair – and time spent waiting sometimes increases the damage to the policyholder – insurance companies in many cases opt to pay up front and assign blame later. They then need a means to get back the costs if, in the end, they weren't actually in charge of the expense.
Can You Give an Example?
You rush into the hospital with a sliced-open finger. You hand the receptionist your medical insurance card and he takes down your policy information. You get stitches and your insurer gets a bill for the services. But the next afternoon, when you clock in at work – where the injury happened – you are given workers compensation paperwork to file. Your workers comp policy is in fact responsible for the bill, not your medical insurance company. It has a vested interest in getting that money back in some way.
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim payment 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 to your self or property. But under subrogation law, your insurer is given 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.
How Does This Affect the Insured?
For starters, if your insurance policy stipulated 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 insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its losses by raising your premiums. On the other hand, if it knows which cases it is owed and pursues those cases enthusiastically, it is acting both in its own interests and in yours. If all is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent to blame), you'll typically get half your deductible back, depending on the laws in your state.
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 employment law east olympia wa, pursue subrogation and succeeds, it will recover your costs in addition to its own.
All insurance agencies are not created equal. When comparing, it's worth examining the reputations of competing companies to determine if they pursue valid subrogation claims; if they do so quickly; if they keep their policyholders updated as the case goes on; 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 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.