Subrogation is a concept that's well-known among legal and insurance professionals but often not by the people they represent. Even if you've never heard the word before, it is in your benefit to understand the nuances of how it works. The more you know about it, the more likely it is that an insurance lawsuit will work out favorably.
Every insurance policy you hold is an assurance that, if something bad happens to you, the company on the other end of the policy will make good without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and police, when necessary) determine who was at fault and that party's insurance pays out.
But since ascertaining who is financially responsible for services or repairs is usually a time-consuming affair – and time spent waiting sometimes compounds the damage to the victim – insurance companies often opt to pay up front and assign blame afterward. They then need a means to get back the costs if, ultimately, they weren't actually responsible for the payout.
You rush into the hospital with a gouged finger. You hand the receptionist your health insurance card and she takes down your policy information. You get stitched up and your insurance company is billed for the expenses. But the next afternoon, when you get to your place of employment – where the injury occurred – your boss hands you workers compensation paperwork to file. Your employer's workers comp policy is actually responsible for the bill, 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 method that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. 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. Ordinarily, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is considered to have 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.
Why Does This Matter to Me?
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 lost some money too – namely, $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to get back its costs by increasing your premiums. On the other hand, if it has a competent legal team and pursues those cases aggressively, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half at fault), you'll typically get $500 back, based on the laws in most states.
Additionally, if the total price 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 criminal defense law firm Provo UT, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurers are not created equal. When comparing, it's worth measuring the records of competing firms to find out whether they pursue winnable subrogation claims; if they do so without dragging their feet; if they keep their accountholders advised as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your money 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 safeguarding its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.