Subrogation and How It Affects Policyholders

Subrogation is a term that's well-known among legal and insurance companies but rarely by the customers who employ them. Even if it sounds complicated, it would be in your self-interest to understand the steps of the process. The more knowledgeable you are, the better decisions you can make about your insurance policy.

An insurance policy you own is a commitment that, if something bad occurs, the firm on the other end of the policy will make good in a timely manner. If a storm damages your property, your property insurance agrees to repay you or pay for the repairs, subject to state property damage laws.

But since ascertaining who is financially responsible for services or repairs is regularly a heavily involved affair – and time spent waiting often increases the damage to the victim – insurance firms often opt to pay up front and figure out the blame later. They then need a means to get back the costs if, when all the facts are laid out, they weren't in charge of the expense.

For Example

You arrive at the hospital with a gouged finger. You give the nurse your medical insurance card and he writes down your policy details. You get stitches and your insurance company gets an invoice for the medical care. But on the following morning, when you get to your place of employment – where the accident occurred – your boss hands you workers compensation forms to file. Your company's workers comp policy is in fact responsible for the expenses, not your medical insurance. The latter has a right to recover its costs in some way.

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 insurance firms have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Under ordinary circumstances, 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.

Why Do I Need to Know This?

For a start, if your insurance policy stipulated 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 lost some money too – to the tune of $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its expenses by raising 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 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, based on the laws in most states.

In addition, if the total price of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as child custody court boulder city Nv, successfully press a subrogation case, it will recover your costs in addition to its own.

All insurers are not the same. When comparing, it's worth examining the records of competing companies to evaluate if they pursue valid subrogation claims; if they do so fast; if they keep their customers advised as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, on the other hand, an insurance company has a record of paying out claims that aren't its responsibility and then covering its profit margin by raising your premiums, you should keep looking.