What Every Insurance Policy holder Ought to Know About Subrogation

Subrogation is a concept that's well-known among legal and insurance professionals but rarely by the policyholders they represent. Even if it sounds complicated, it is in your self-interest to comprehend the steps of how it works. The more you know about it, the more likely it is that relevant proceedings will work out in your favor.

Every insurance policy you have is an assurance that, if something bad happens to you, the company that covers the policy will make good without unreasonable delay. If you get an injury at work, for example, your company's workers compensation insurance pays out 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 sometimes a confusing affair – and delay in some cases increases the damage to the victim – insurance firms usually opt to pay up front and figure out the blame afterward. They then need a way to recoup the costs if, in the end, they weren't in charge of the payout.

Let's Look at an Example

You are in a vehicle 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 at fault and her insurance should have paid for the repair of your vehicle. How does your insurance company get its money back?

How Subrogation Works

This is where subrogation comes in. It is the way that an insurance company uses to claim payment 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. Ordinarily, only you can sue for damages to your person 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 Does This Matter to Me?

For a start, if your insurance policy stipulated a deductible, it wasn't just your insurance company 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 insurance company is lax about bringing subrogation cases to court, it might opt to get back its expenses by ballooning your premiums. On the other hand, if it has a knowledgeable legal team and pursues them aggressively, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half at fault), you'll typically get half your deductible back, depending on the laws in your state.

Moreover, if the total expense 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 injury lawyer Alpharetta ga, pursue subrogation and wins, it will recover your losses in addition to its own.

All insurers are not created equal. When comparing, it's worth examining the reputations of competing companies to determine whether they pursue winnable subrogation claims; if they do so with some expediency; if they keep their clients apprised as the case continues; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, on the other hand, an insurance firm has a record of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you should keep looking.