Subrogation and How It Affects You

Subrogation is a term that's understood among legal and insurance firms but often not by the policyholders who employ them. Rather than leave it to the professionals, it would be to your advantage to know the steps of how it works. The more knowledgeable you are, the better decisions you can make about your insurance company.

Every insurance policy you have is an assurance that, if something bad occurs, the business that covers the policy will make good in one way or another in a timely manner. If you get hurt at work, for example, your employer's workers compensation insurance picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.

But since ascertaining who is financially responsible for services or repairs is sometimes a tedious, lengthy affair – and time spent waiting sometimes compounds the damage to the policyholder – insurance firms often decide to pay up front and figure out the blame afterward. They then need a path to recover the costs if, when all is said and done, they weren't in charge of the payout.

For Example

Your bedroom catches fire and causes $10,000 in home damages. Happily, you have property insurance and it pays out your claim in full. However, in its investigation it finds out that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him responsible for the damages. You already have your money, but your insurance firm is out all that money. What does the firm do next?

How Does Subrogation Work?

This is where subrogation comes in. It is the way 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. Ordinarily, only you can sue for damages to your self 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 originally due to you, because it has covered the amount already.

How Does This Affect Policyholders?

For starters, if you have a deductible, your insurance company wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to be precise, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its losses by increasing your premiums. On the other hand, if it has a competent legal team and pursues them enthusiastically, it is doing you a favor as well as itself. 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 to blame), you'll typically get $500 back, depending on the laws in your state.

Additionally, if the total expense 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 immigration attorney near me Magna Ut, successfully press a subrogation case, it will recover your costs as well as its own.

All insurers are not created equal. When shopping around, it's worth comparing the reputations of competing companies to determine whether they pursue valid subrogation claims; if they do so in a reasonable amount of time; if they keep their customers updated as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, instead, an insurance company has a record of honoring claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.