The Things Every Insurance Policy holder Ought to Know About Subrogation

Subrogation is a term that's well-known in insurance and legal circles but sometimes not by the policyholders they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your benefit to understand the steps of how it works. The more knowledgeable you are about it, the more likely an insurance lawsuit will work out favorably.

Every insurance policy you hold is an assurance that, if something bad occurs, the insurer of the policy will make restitutions in one way or another in a timely fashion. If your property is robbed, for instance, your property insurance steps in to compensate you or enable the repairs, subject to state property damage laws.

But since figuring out who is financially accountable for services or repairs is sometimes a tedious, lengthy affair – and delay sometimes adds to the damage to the policyholder – insurance firms often decide to pay up front and figure out the blame afterward. They then need a method to get back the costs if, when there is time to look at all the facts, they weren't in charge of the expense.

Can You Give an Example?

You are in a vehicle accident. Another car ran into yours. The police show up to assess the situation, 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 entirely to blame and her insurance should have paid for the repair of your vehicle. How does your insurance company get its money back?

How Subrogation Works

This is where subrogation comes in. It is the way 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. Usually, only you can sue for damages to your person or property. But under subrogation law, your insurer is extended 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 a start, if you have a deductible, it wasn't just your insurer that 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 insurance company is timid on any subrogation case it might not win, it might choose to get back its losses by raising your premiums. On the other hand, if it knows which cases it is owed and pursues them efficiently, 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 responsible), 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 work accident attorney Whitewater, WI, pursue subrogation and wins, it will recover your costs in addition to its own.

All insurers are not the same. When comparing, it's worth looking up the records of competing firms to evaluate whether they pursue valid subrogation claims; if they do so with some expediency; if they keep their policyholders updated as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your funding 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 protecting its bottom line by raising your premiums, you'll feel the sting later.