What Every Insurance Policy holder Ought to Know About Subrogation

Subrogation is a concept that's understood among legal and insurance firms but often not by the policyholders they represent. Rather than leave it to the professionals, it would be to your advantage to comprehend the steps of how it works. The more knowledgeable you are about it, the more likely it is that an insurance lawsuit will work out favorably.

An insurance policy you have is a promise that, if something bad occurs, the business that insures the policy will make restitutions in a timely fashion. If you get an injury at work, for instance, your company's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.

But since determining who is financially accountable for services or repairs is sometimes a time-consuming affair – and time spent waiting often increases the damage to the policyholder – insurance firms usually decide to pay up front and figure out the blame afterward. They then need a path to get back the costs if, ultimately, they weren't actually responsible for the expense.

For Example

Your stove catches fire and causes $10,000 in house damages. Happily, you have property insurance and it pays for the repairs. However, the insurance investigator discovers that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him accountable for the damages. The home has already been repaired in the name of expediency, but your insurance company is out $10,000. What does the company do next?

How Does Subrogation Work?

This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement 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 self or property. But under subrogation law, your insurance company is considered to have some of your rights 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.

How Does This Affect the Insured?

For starters, if you have a deductible, it wasn't just your insurance company that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to be precise, $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to recoup 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 those cases enthusiastically, it is acting both in its own interests and in yours. 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, based on the laws in most states.

Additionally, if the total cost of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as car accident attorney austell ga, successfully press a subrogation case, it will recover your losses in addition to its own.

All insurers are not the same. When shopping around, it's worth looking at the records of competing firms to evaluate if they pursue valid subrogation claims; if they do so fast; if they keep their accountholders posted as the case continues; and if they then process successfully won reimbursements right away so that you can get your deductible 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 covering its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.