Subrogation and How It Affects Policyholders

Subrogation is a term that's understood in legal and insurance circles but rarely by the policyholders they represent. Rather than leave it to the professionals, it would be to your advantage to understand the steps of how it works. The more information you have, the more likely relevant proceedings will work out favorably.

Any insurance policy you own is an assurance that, if something bad happens to you, the insurer of the policy will make restitutions in one way or another in a timely manner. If you get an injury while working, your company's workers compensation pays out 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 regularly a tedious, lengthy affair – and delay sometimes increases the damage to the victim – insurance companies usually opt to pay up front and figure out the blame afterward. They then need a mechanism to recoup the costs if, ultimately, they weren't actually responsible for the expense.

For Example

You are in a highway accident. Another car ran into yours. The police show up to assess the situation, you exchange insurance information, and you go on your way. You have comprehensive insurance and file a repair claim. Later police tell the insurance companies that the other driver was to blame and his insurance policy should have paid for the repair of your auto. How does your company get its money back?

How Does Subrogation Work?

This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement 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 done to your person or property. But under subrogation law, your insurer is considered to have 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.

How Does This Affect Me?

For starters, if your insurance policy stipulated 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 – to be precise, $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to get back its costs by increasing your premiums. On the other hand, if it has a proficient legal team 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 50 percent culpable), you'll typically get $500 back, depending on the laws in your state.

Furthermore, if the total loss of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as employment lawyer tacoma wa, successfully press a subrogation case, it will recover your losses in addition to its own.

All insurance companies are not the same. When comparing, it's worth looking at the reputations of competing firms to find out if they pursue winnable subrogation claims; if they resolve those claims quickly; if they keep their clients informed as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, on the other hand, an insurer has a reputation of honoring claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you'll feel the sting later.