The Things Every Policy holder Ought to Know About Subrogation
Subrogation is an idea that's well-known in legal and insurance circles but sometimes not by the customers who hire them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your benefit to know the nuances of how it works. The more knowledgeable you are about it, the more likely relevant proceedings will work out favorably.
Every insurance policy you have is a commitment that, if something bad happens to you, the business on the other end of the policy will make good in one way or another without unreasonable delay. If you get an injury at work, your employer's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially responsible for services or repairs is sometimes a tedious, lengthy affair – and delay often compounds the damage to the policyholder – insurance firms often decide to pay up front and figure out the blame afterward. They then need a means to recover the costs if, when all is said and done, they weren't responsible for the payout.
Let's Look at an Example
You rush into the emergency room with a deeply cut finger. You give the nurse your medical insurance card and she records your policy details. You get stitches and your insurance company is billed for the medical care. But the next day, when you clock in at your workplace – where the accident happened – your boss hands you workers compensation forms to file. Your employer's workers comp policy is in fact responsible for the invoice, not your medical insurance. It has a vested interest in getting that money back somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the method that an insurance company uses to claim payment 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. Under ordinary circumstances, 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 that was originally due to you, because it has covered the amount already.
How Does This Affect Individuals?
For starters, if you have 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 have a stake in the outcome as well – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to recoup its costs by upping your premiums. On the other hand, if it knows which cases it is owed and goes after those cases aggressively, it is acting both in its own interests and in yours. If all of the money 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.
In addition, if the total cost 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 medical malpractice morgan hill ca, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurance agencies are not created equal. When shopping around, it's worth researching the records of competing companies to determine if they pursue valid subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their customers posted 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 honoring claims that aren't its responsibility and then protecting its profit margin by raising your premiums, you'll feel the sting later.