Subrogation and How It Affects You

Subrogation is a concept that's understood in legal and insurance circles but often not by the people who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your benefit to understand the nuances of how it works. The more information you have about it, the more likely it is that relevant proceedings will work out favorably.

Every insurance policy you own is a commitment that, if something bad happens to you, the business that covers the policy will make good in a timely fashion. If you get an injury while working, your company's workers compensation agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.

But since determining who is financially responsible for services or repairs is regularly a time-consuming affair – and delay sometimes adds to the damage to the policyholder – insurance companies often decide to pay up front and assign blame later. They then need a mechanism to get back the costs if, when all is said and done, they weren't actually in charge of the expense.

For Example

You are in a highway accident. Another car collided with yours. The police show up to assess the situation, you exchange insurance information, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later it's determined that the other driver was to blame and her insurance policy should have paid for the repair of your vehicle. How does your company get its money back?

How Does Subrogation Work?

This is where subrogation comes in. It is the method 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. Ordinarily, only you can sue for damages done to your person or property. But under subrogation law, your insurance company 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 Should I Care?

For a start, 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 have a stake in the outcome as well – namely, $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to get back its expenses by raising your premiums and call it a day. On the other hand, if it has a proficient legal team and goes after those cases aggressively, 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 one-half accountable), you'll typically get half your deductible back, based on the laws in most states.

Additionally, if the total price 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 probate attorney whitewater wi, pursue subrogation and succeeds, it will recover your expenses in addition to its own.

All insurance companies are not the same. When shopping around, it's worth looking at the records of competing firms to determine whether they pursue legitimate subrogation claims; if they resolve those claims fast; if they keep their customers informed as the case continues; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then safeguarding its income by raising your premiums, you'll feel the sting later.

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