Subrogation and How It Affects You

Subrogation is an idea that's understood among legal and insurance firms but sometimes not by the policyholders they represent. Rather than leave it to the professionals, it is in your self-interest to understand an overview of how it works. The more information you have, the more likely it is that an insurance lawsuit will work out favorably.

Any insurance policy you own is a promise that, if something bad occurs, the business that insures the policy will make good in one way or another in a timely fashion. If you get an injury while working, your company's workers compensation insurance agrees to pay 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 typically a tedious, lengthy affair – and time spent waiting in some cases increases the damage to the victim – insurance companies usually opt to pay up front and figure out the blame afterward. They then need a method to get back the costs if, ultimately, they weren't responsible for the expense.

For Example

You are in a vehicle accident. Another car crashed into yours. The police show up to assess the situation, you exchange insurance details, 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 entirely at fault and his insurance should have paid for the repair of your car. How does your insurance company get its funds back?

How Subrogation Works

This is where subrogation comes in. It is the process 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. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is given 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 Does This Matter to Me?

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 lost some money too – to the tune of $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to get back its costs by raising your premiums. On the other hand, if it has a competent legal team and goes after them aggressively, it is doing you a favor as well as itself. If all is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent responsible), you'll typically get half your deductible back, depending on the laws in your state.

Additionally, if the total loss 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 auto accident attorney Lithia springs GA, pursue subrogation and succeeds, it will recover your costs in addition to its own.

All insurance companies are not the same. When comparing, it's worth looking up the reputations of competing agencies to evaluate whether they pursue legitimate subrogation claims; if they resolve those claims quickly; if they keep their customers 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 insurance firm has a record of honoring claims that aren't its responsibility and then covering its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.