Subrogation is a concept that's well-known among legal and insurance professionals but sometimes not by the policyholders they represent. Even if you've never heard the word before, it would be in your self-interest to comprehend an overview of how it works. The more you know about it, the more likely it is that an insurance lawsuit will work out favorably.
Any insurance policy you own is an assurance that, if something bad happens to you, the firm on the other end of the policy will make restitutions in one way or another in a timely fashion. If you get hurt at work, for instance, your company's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially responsible for services or repairs is often a tedious, lengthy affair – and time spent waiting sometimes adds to the damage to the victim – insurance firms usually opt to pay up front and figure out the blame after the fact. They then need a method to recoup the costs if, ultimately, they weren't responsible for the expense.
Let's Look at an Example
You head to the doctor's office with a gouged finger. You give the receptionist your medical insurance card and she takes down your coverage information. You get stitches and your insurance company is billed for the medical care. But on the following afternoon, when you get to your place of employment – where the accident occurred – your boss hands you workers compensation paperwork to turn in. Your workers comp policy is actually responsible for the hospital visit, not your medical insurance policy. It has a vested interest in getting that money back somehow.
How Subrogation Works
This is where subrogation comes in. It is the process 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. Ordinarily, only you can sue for damages to your person or property. But under subrogation law, your insurance company is given 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 Policyholders?
For starters, if your insurance policy stipulated a deductible, your insurance company wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recoup its expenses by raising your premiums and call it a day. 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 $10,000 is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent culpable), you'll typically get $500 back, depending on your state laws.
Moreover, if the total loss 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 workman's comp insurance Purcellville, VA, pursue subrogation and wins, it will recover your losses as well as its own.
All insurance agencies are not the same. When shopping around, it's worth scrutinizing the records of competing agencies to find out if they pursue legitimate subrogation claims; if they resolve those claims without delay; if they keep their customers updated as the case continues; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, instead, an insurance firm has a reputation of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you'll feel the sting later.