Subrogation and How It Affects Policyholders

Subrogation is a term that's understood among insurance and legal firms but sometimes not by the customers they represent. Rather than leave it to the professionals, it is in your benefit to comprehend the nuances of the process. The more information you have about it, the more likely an insurance lawsuit will work out favorably.

Every insurance policy you own is a commitment that, if something bad occurs, the company on the other end of the policy will make good in a timely fashion. If you get an injury while working, for example, your employer's workers compensation agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.

But since determining who is financially accountable for services or repairs is typically a tedious, lengthy affair – and delay in some cases increases the damage to the policyholder – insurance companies in many cases opt to pay up front and assign blame later. They then need a mechanism to recoup the costs if, ultimately, they weren't responsible for the payout.

For Example

You are in a car accident. Another car collided with yours. Police are called, you exchange insurance details, and you go on your way. You have comprehensive insurance and file a repair claim. Later it's determined that the other driver was at fault and his insurance policy should have paid for the repair of your auto. How does your insurance company get its funds back?

How Subrogation Works

This is where subrogation comes in. It is the way 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. Usually, only you can sue for damages done to your person or property. But under subrogation law, your insurer is considered to have some of your rights for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.

How Does This Affect Policyholders?

For starters, if you have a deductible, it wasn't just your insurer 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 costs by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them aggressively, it is doing you a favor as well as itself. 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 $500 back, based on the laws in most states.

Furthermore, if the total price 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 criminal law defense attorney Vancouver WA, successfully press a subrogation case, it will recover your costs in addition to its own.

All insurance companies are not created equal. When comparing, it's worth looking up the reputations of competing companies to evaluate if they pursue winnable subrogation claims; if they resolve those claims fast; if they keep their accountholders advised as the case continues; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, on the other hand, an insurance agency has a record of honoring claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you should keep looking.