Subrogation and How It Affects Policyholders

Subrogation is an idea that's understood in insurance and legal circles but sometimes not by the people who employ them. Rather than leave it to the professionals, it would be to your advantage to comprehend the steps of the process. The more information you have about it, the better decisions you can make about your insurance policy.

Every insurance policy you have is an assurance that, if something bad happens to you, the business that covers the policy will make good without unreasonable delay. If your real estate suffers fire damage, your property insurance steps in to repay you or facilitate the repairs, subject to state property damage laws.

But since ascertaining who is financially responsible for services or repairs is often a tedious, lengthy affair – and time spent waiting often compounds the damage to the policyholder – insurance companies in many cases opt to pay up front and assign blame after the fact. They then need a way to recover the costs if, when all the facts are laid out, they weren't actually in charge of the payout.

For Example

You are in a traffic-light accident. Another car ran into yours. Police are called, you exchange insurance details, 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 his insurance should have paid for the repair of your auto. How does your insurance company get its money back?

How Subrogation Works

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 insurance firms 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 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 originally due to you, because it has covered the amount already.

Why Should I Care?

For one thing, 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 – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to get back its expenses by upping your premiums and call it a day. On the other hand, if it has a capable legal team and goes after those cases enthusiastically, it is doing you a favor as well as itself. If all of the money is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get half your deductible back, depending on the laws in your state.

Moreover, if the total cost of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as lawyer office payson ut, successfully press a subrogation case, it will recover your losses in addition to its own.

All insurers are not created equal. When shopping around, it's worth looking at the records of competing firms to find out if they pursue legitimate subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their customers informed 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, instead, an insurer has a reputation of paying out claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.