The Things You Need to Know About Subrogation

Subrogation is a concept that's well-known among insurance and legal professionals but sometimes not by the policyholders who hire them. Even if it sounds complicated, it would be in your benefit to comprehend an overview of the process. The more information you have about it, the more likely an insurance lawsuit will work out favorably.

An insurance policy you have is an assurance that, if something bad happens to you, the insurer of the policy will make restitutions in a timely fashion. If your property suffers fire damage, for example, your property insurance agrees to pay you or facilitate the repairs, subject to state property damage laws.

But since ascertaining who is financially accountable for services or repairs is often a heavily involved affair – and delay sometimes adds to the damage to the policyholder – insurance firms in many cases decide to pay up front and figure out the blame after the fact. They then need a way 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 go to the emergency room with a gouged finger. You give the nurse your health insurance card and he writes down your coverage details. You get stitched up and your insurance company gets an invoice for the medical care. But the next day, when you get to work – where the accident happened – your boss hands you workers compensation forms to turn in. Your workers comp policy is in fact responsible for the hospital visit, not your health insurance. It has a vested interest in getting that money back somehow.

How Subrogation Works

This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement 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 self or property. But under subrogation law, your insurance company is considered to have some of your rights in exchange for having taken care of the damages. It can go after the money that was originally due to you, because it has covered the amount already.

How Does This Affect Me?

For one thing, 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 – namely, $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to get back its expenses by upping your premiums. On the other hand, if it has a proficient legal team and goes after them enthusiastically, it is doing you a favor as well as itself. If all 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 half your deductible back, depending on the laws in your state.

In addition, if the total loss of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as real estate lawyer Lake Geneva, WI, pursue subrogation and wins, it will recover your losses as well as its own.

All insurance companies are not the same. When shopping around, it's worth looking up the reputations of competing firms to determine whether they pursue winnable subrogation claims; if they do so fast; if they keep their policyholders advised as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, instead, an insurance firm has a record of paying out claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.