- 8 10, 2021
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Subrogation is an idea that's understood in legal and insurance circles but rarely by the policyholders who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your benefit to know the steps of the process. The more information you have, the better decisions you can make about your insurance company.
Any insurance policy you own is a commitment that, if something bad occurs, the insurer of the policy will make good in one way or another without unreasonable delay. If you get injured at work, for example, your company's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially accountable for services or repairs is usually a tedious, lengthy affair – and delay in some cases increases the damage to the victim – insurance companies often decide to pay up front and figure out the blame afterward. They then need a mechanism to regain the costs if, in the end, they weren't in charge of the payout.
You go to the Instacare with a deeply cut finger. You hand the receptionist your health insurance card and he takes down your plan information. You get stitched up and your insurance company is billed for the services. But on the following morning, when you clock in at your place of employment – where the accident happened – your boss hands you workers compensation forms to fill out. Your company's workers comp policy is actually responsible for the payout, not your health 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 way that an insurance company uses to claim payment 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. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is considered to have some of your rights 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 Individuals?
For one thing, if you have a deductible, it wasn't just your insurance company who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to be precise, $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to get back its expenses by upping your premiums. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is acting both in its own interests and in yours. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half to blame), you'll typically get half your deductible back, depending on your state laws.
In addition, 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 Attorney at law Lacey, WA, pursue subrogation and wins, it will recover your costs in addition to its own.
All insurers are not created equal. When shopping around, it's worth looking up the records of competing companies to evaluate if they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their accountholders informed as the case continues; 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 paying out claims that aren't its responsibility and then covering its profit margin by raising your premiums, you'll feel the sting later.