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Subrogation is an idea that's well-known in insurance and legal circles but sometimes not by the people they represent. Even if it sounds complicated, it would be in your benefit to comprehend the nuances of the process. The more knowledgeable you are, the more likely relevant proceedings will work out favorably.

Any insurance policy you own is a commitment that, if something bad happens to you, the company that covers the policy will make restitutions in one way or another in a timely fashion. If your vehicle is in a fender-bender, insurance adjusters (and the courts, when necessary) decide who was to blame and that party's insurance covers the damages.

But since ascertaining who is financially responsible for services or repairs is often a confusing affair – and delay in some cases adds to the damage to the policyholder – insurance companies often opt to pay up front and figure out the blame later. They then need a way to recoup the costs if, once the situation is fully assessed, they weren't actually in charge of the expense.

Can You Give an Example?

You are in a car 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 police tell the insurance companies that the other driver was entirely to blame and her insurance should have paid for the repair of your auto. How does your insurance company get its funds back?

How Does Subrogation Work?

This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement after it has paid for something that should have been paid by some other entity. Some companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Under ordinary circumstances, only you can sue for damages 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 Me?

For one thing, if you have a deductible, your insurer wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to the tune of $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recover its costs by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases aggressively, it is doing you a favor as well as itself. If all ten grand 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 to blame), you'll typically get $500 back, based on the laws in most states.

Moreover, if the total cost 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 lawyer for child custody Springville ut, successfully press a subrogation case, it will recover your expenses as well as its own.

All insurance companies are not created equal. When shopping around, it's worth examining the records of competing agencies to determine if they pursue winnable subrogation claims; if they resolve those claims with some expediency; if they keep their policyholders updated as the case goes on; 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 insurer has a record of paying out claims that aren't its responsibility and then covering its profitability by raising your premiums, you'll feel the sting later.