The Things You Need to Know About Subrogation

Subrogation is a term that's well-known in legal and insurance circles but rarely by the people they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your benefit to understand an overview of how it works. The more information you have about it, the more likely relevant proceedings will work out favorably.

Any insurance policy you own is a promise that, if something bad occurs, the firm on the other end of the policy will make restitutions without unreasonable delay. If you get hurt while you're on the clock, your employer's workers compensation pays out 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 usually a time-consuming affair – and time spent waiting sometimes adds to the damage to the policyholder – insurance firms often opt to pay up front and figure out the blame later. They then need a method to recoup the costs if, when there is time to look at all the facts, they weren't actually responsible for the expense.

For Example

You are in a car accident. Another car crashed 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 police tell the insurance companies that the other driver was entirely at fault and her insurance policy should have paid for the repair of your car. 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 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. Ordinarily, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is extended 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 that 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 insurance company is lax about bringing subrogation cases to court, it might opt to recover its losses by upping your premiums. On the other hand, if it has a proficient legal team and pursues them aggressively, it is doing you a favor as well as itself. If all of the money 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 at fault), you'll typically get $500 back, depending on the laws in your state.

Furthermore, 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 family law 95037, successfully press a subrogation case, it will recover your costs as well as its own.

All insurance agencies are not created equal. When comparing, it's worth examining the reputations of competing agencies to find out if they pursue valid subrogation claims; if they do so fast; if they keep their customers advised as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, instead, an insurance agency has a reputation of paying out 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.