What Every Insurance Policy holder Ought to Know About Subrogation

Subrogation is a term that's understood among legal and insurance companies but sometimes not by the policyholders who hire them. Rather than leave it to the professionals, it is to your advantage to comprehend an overview of how it works. The more you know about it, the better decisions you can make about your insurance company.

Every insurance policy you own is a commitment that, if something bad occurs, the insurer of the policy will make good in one way or another without unreasonable delay. If your vehicle is hit, insurance adjusters (and the judicial system, when necessary) determine who was to blame and that person's insurance covers the damages.

But since ascertaining who is financially accountable for services or repairs is usually a confusing affair – and time spent waiting sometimes compounds 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 way to recoup the costs if, when all the facts are laid out, they weren't in charge of the expense.

For Example

Your bedroom catches fire and causes $10,000 in house damages. Fortunately, you have property insurance and it takes care of the repair expenses. 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 liable for the loss. You already have your money, but your insurance agency is out all that money. What does the agency do next?

How Subrogation Works

This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement 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 done to your self or property. But under subrogation law, your insurance company is extended some of your rights in exchange for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.

Why Should I Care?

For a start, if your insurance policy stipulated 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 – namely, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its expenses by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found one-half culpable), you'll typically get half your deductible back, based on the laws in most states.

Additionally, if the total cost of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as immigration defense attorney Magna Ut, successfully press a subrogation case, it will recover your costs in addition to its own.

All insurance companies are not the same. When comparing, it's worth examining the reputations of competing agencies to evaluate whether they pursue legitimate subrogation claims; if they resolve those claims quickly; if they keep their customers advised as the case goes on; 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 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.