Subrogation is an idea that's well-known in legal and insurance circles but sometimes not by the policyholders who hire them. Rather than leave it to the professionals, it would be in your self-interest to understand the nuances of the process. The more you know, the more likely an insurance lawsuit will work out in your favor.
Every insurance policy you have is a commitment that, if something bad happens to you, the insurer of the policy will make good in one way or another in a timely manner. If a fire damages your property, for example, your property insurance agrees to pay you or enable the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is regularly a tedious, lengthy affair – and delay in some cases compounds the damage to the policyholder – insurance firms in many cases decide to pay up front and figure out the blame later. They then need a path to regain the costs if, ultimately, they weren't actually in charge of the expense.
Can You Give an Example?
You rush into the Instacare with a sliced-open finger. You give the nurse your health insurance card and she records your plan details. You get stitched up and your insurance company gets an invoice for the services. But the next afternoon, when you arrive at your place of employment – where the injury occurred – your boss hands you workers compensation forms to fill out. Your workers comp policy is actually responsible for the expenses, not your health insurance policy. The latter has a right to recover its money somehow.
How Subrogation Works
This is where subrogation comes in. It is the way 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. Under ordinary circumstances, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is extended some of your rights in exchange for making good on 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 your insurance policy stipulated a deductible, it wasn't just your insurance company who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recoup its expenses by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases efficiently, 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 one-half to blame), you'll typically get $500 back, depending on the laws in your state.
Additionally, if the total cost 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 workers comp attorney near me Reisterstown MD, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance agencies are not created equal. When shopping around, it's worth researching the reputations of competing agencies to evaluate if they pursue valid subrogation claims; if they resolve those claims with some expediency; if they keep their policyholders advised as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, on the other hand, an insurer has a reputation of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, even attractive rates won't outweigh the eventual headache.