The Things You Need to Know About Subrogation

Subrogation is an idea that's understood in legal and insurance circles but often not by the customers they represent. Rather than leave it to the professionals, it is in your self-interest to comprehend the nuances of how it works. The more information you have about it, the better decisions you can make with regard to your insurance company.

An insurance policy you have is a promise that, if something bad happens to you, the business that covers the policy will make restitutions without unreasonable delay. If a blizzard damages your house, for instance, your property insurance steps in to pay you or enable the repairs, subject to state property damage laws.

But since figuring out who is financially accountable for services or repairs is typically a time-consuming affair – and time spent waiting sometimes adds to the damage to the victim – insurance companies often opt to pay up front and assign blame later. They then need a path to get back the costs if, once the situation is fully assessed, they weren't actually in charge of the expense.

Can You Give an Example?

You are in a car accident. Another car ran into yours. Police are called, 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 should have paid for the repair of your car. How does your insurance company get its funds back?

How Does Subrogation Work?

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. Usually, 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.

How Does This Affect the Insured?

For starters, if your insurance policy stipulated a deductible, your insurance company wasn't the only one who 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 insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its expenses by increasing your premiums. On the other hand, if it knows which cases it is owed and goes after those cases aggressively, it is acting both in its own interests and in yours. 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 responsible), you'll typically get half your deductible back, based on the laws in most states.

In addition, 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 employment lawyer spanish fork ut, pursue subrogation and succeeds, it will recover your losses in addition to its own.

All insurance companies are not created equal. When shopping around, it's worth measuring the reputations of competing companies to find out whether they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their clients advised as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your losses 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 covering its profitability by raising your premiums, you should keep looking.