Subrogation is a term that's well-known in insurance and legal circles but often not by the people who hire them. Even if it sounds complicated, it is in your benefit to understand the steps of the process. The more you know, the better decisions you can make about your insurance policy.
Every insurance policy you have is an assurance that, if something bad happens to you, the firm that covers the policy will make restitutions in a timely manner. If you get injured while you're on the clock, for example, your company's workers compensation agrees to pay 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 often a confusing affair – and time spent waiting sometimes adds to the damage to the policyholder – insurance firms usually opt to pay up front and figure out the blame afterward. They then need a path to recoup the costs if, once the situation is fully assessed, they weren't actually responsible for the payout.
You head to the doctor's office with a gouged finger. You hand the nurse your health insurance card and she writes down your plan information. You get stitches and your insurer gets an invoice for the tab. But the next morning, when you get to work – where the accident occurred – your boss hands you workers compensation paperwork to fill out. Your company's workers comp policy is in fact responsible for the invoice, not your health insurance. 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 when it pays out a claim that turned out not to be its responsibility. 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 done to your self or property. But under subrogation law, your insurer is extended 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 the Insured?
For a start, if your insurance policy stipulated a deductible, your insurer wasn't the only one 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 lax about bringing subrogation cases to court, it might choose to recoup its expenses by upping your premiums. On the other hand, if it knows which cases it is owed and pursues those cases aggressively, 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 50 percent accountable), you'll typically get $500 back, depending on the laws in your state.
Moreover, if the total expense 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 personal injury lawyers glen burnie, md, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance companies are not created equal. When comparing, it's worth scrutinizing the records of competing agencies to determine if they pursue valid subrogation claims; if they do so fast; if they keep their accountholders updated as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, on the other hand, an insurer has a record of paying out claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you'll feel the sting later.