What You Need to Know About Subrogation

Subrogation is an idea that's well-known in legal and insurance circles but often not by the policyholders they represent. Rather than leave it to the professionals, it is in your self-interest to understand an overview of the process. The more you know, the more likely it is that an insurance lawsuit will work out in your favor.

An insurance policy you own is a commitment that, if something bad occurs, the firm on the other end of the policy will make restitutions in one way or another in a timely manner. If a fire damages your real estate, your property insurance steps in to remunerate you or enable the repairs, subject to state property damage laws.

But since ascertaining who is financially accountable for services or repairs is regularly a confusing affair – and delay in some cases compounds the damage to the policyholder – insurance companies usually decide to pay up front and figure out the blame later. They then need a path to recoup the costs if, once the situation is fully assessed, they weren't responsible for the payout.

Let's Look at an Example

You are in a vehicle accident. Another car crashed into yours. Police are called, you exchange insurance details, and you go on your way. You have comprehensive insurance and file a repair claim. Later it's determined that the other driver was entirely at fault and her insurance policy should have paid for the repair of your auto. How does your insurance company get its funds back?

How Does Subrogation Work?

This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement 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. Ordinarily, only you can sue for damages done to your self or property. But under subrogation law, your insurer is given some of your rights in exchange 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.

Why Does This Matter to Me?

For starters, if you have a deductible, your insurer wasn't the only one that 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 unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its losses by boosting your premiums. On the other hand, if it has a competent legal team and pursues those cases efficiently, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent to blame), you'll typically get $500 back, based on the laws in most states.

Moreover, if the total expense of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as attorneys that specialize in auto accidents Austell GA, successfully press a subrogation case, it will recover your costs as well as its own.

All insurance agencies are not created equal. When comparing, it's worth scrutinizing the records of competing companies to determine if they pursue valid subrogation claims; if they resolve those claims with some expediency; if they keep their clients apprised as the case continues; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, on the other hand, an insurer has a reputation of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, even attractive rates won't outweigh the eventual headache.

Subrogation and How It Affects Policyholders

Subrogation is an idea that's understood in insurance and legal circles but sometimes not by the people they represent. Even if it sounds complicated, it would be to your advantage to comprehend the nuances of how it works. The more knowledgeable you are about it, the more likely an insurance lawsuit will work out in your favor.

Every insurance policy you have is an assurance that, if something bad occurs, the business that covers the policy will make restitutions in one way or another in a timely manner. If your vehicle is rear-ended, insurance adjusters (and the courts, when necessary) decide who was at fault and that party's insurance covers the damages.

But since determining who is financially responsible for services or repairs is regularly a tedious, lengthy affair – and delay in some cases increases the damage to the policyholder – insurance companies usually opt to pay up front and assign blame afterward. They then need a mechanism to recover the costs if, when there is time to look at all the facts, they weren't responsible for the expense.

Can You Give an Example?

You rush into the doctor's office with a gouged finger. You hand the nurse your health insurance card and he writes down your plan information. You get stitches and your insurance company gets a bill for the tab. But on the following day, when you clock in at work – where the injury occurred – you are given workers compensation forms to file. 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 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 companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Usually, only you can sue for damages to your person or property. But under subrogation law, your insurance company is given some of your rights in exchange for having taken care of 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 a start, 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 insurer is lax about bringing subrogation cases to court, it might choose to recoup its expenses by upping your premiums and call it a day. On the other hand, if it has a proficient 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 50 percent to blame), you'll typically get half your deductible back, based on the laws in most states.

In addition, if the total price of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as child custody help boulder city Nv, successfully press a subrogation case, it will recover your expenses as well as its own.

All insurers are not the same. When shopping around, it's worth comparing the records of competing companies to determine if they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their policyholders advised as the case continues; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, instead, an insurer has a record of paying out claims that aren't its responsibility and then protecting its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.

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