Subrogation is an idea that's understood in legal and insurance circles but rarely by the people they represent. Even if it sounds complicated, it would be in your self-interest to know the nuances of how it works. The more knowledgeable you are, 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 insurer of the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and the judicial system, when necessary) determine who was to blame and that party's insurance pays out.
But since determining who is financially responsible for services or repairs is often a tedious, lengthy affair – and delay sometimes compounds the damage to the victim – insurance firms in many cases opt to pay up front and figure out the blame after the fact. They then need a path to get back the costs if, when there is time to look at all the facts, they weren't responsible for the payout.
You arrive at the doctor's office with a gouged finger. You hand the nurse your medical insurance card and he writes down your coverage details. You get taken care of and your insurer gets a bill for the medical care. But the next morning, when you get to your workplace – where the injury occurred – your boss hands you workers compensation paperwork to fill out. Your employer's workers comp policy is in fact responsible for the hospital trip, not your medical insurance. The latter has an interest in recovering its costs somehow.
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. Under ordinary circumstances, only you can sue for damages done to your person or property. But under subrogation law, your insurer is given some of your rights in exchange 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 Policyholders?
For starters, if you have a deductible, it wasn't just your insurer 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 timid on any subrogation case it might not win, it might opt to recover its losses by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases 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 50 percent accountable), you'll typically get $500 back, depending on the laws in your state.
Additionally, 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 auto wreck lawyer Washington DC, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurers are not created equal. When shopping around, it's worth looking at the reputations of competing agencies to evaluate whether they pursue valid subrogation claims; if they do so in a reasonable amount of time; if they keep their policyholders informed as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, on the other hand, an insurance firm has a record of paying out claims that aren't its responsibility and then covering its bottom line by raising your premiums, you should keep looking.