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Subrogation and How It Affects Policyholders

Subrogation is a concept that's well-known in legal and insurance circles but often not by the people who hire them. Rather than leave it to the professionals, it is to your advantage to understand the nuances of the process. The more knowledgeable you are, the more likely an insurance lawsuit will work out favorably.

Any insurance policy you own is a commitment that, if something bad happens to you, the business on the other end of the policy will make good in one way or another without unreasonable delay. If you get an injury at work, for example, your company's workers compensation insurance picks up the tab 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 sometimes a time-consuming affair – and delay sometimes increases the damage to the victim – insurance firms in many cases decide to pay up front and assign blame later. They then need a path to recoup the costs if, in the end, they weren't in charge of the expense.

Let's Look at an Example

Your bedroom catches fire and causes $10,000 in house damages. Luckily, you have property insurance and it takes care of the repair expenses. However, the assessor assigned to your case discovers that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him to blame for the damages. You already have your money, but your insurance company is out $10,000. What does the company do next?

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. Normally, only you can sue for damages to your person or property. But under subrogation law, your insurer is given some of your rights for making good on 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 Individuals?

For one thing, if your insurance policy stipulated a deductible, your insurer wasn't the only one that 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 timid on any subrogation case it might not win, it might opt to get back its expenses by boosting your premiums and call it a day. On the other hand, if it has a competent legal team and pursues those cases aggressively, it is doing you a favor as well as itself. If all $10,000 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 accountable), you'll typically get $500 back, depending on your state laws.

Furthermore, if the total loss of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as Car Accident Lawyer in Mableton, Ga, successfully press a subrogation case, it will recover your expenses as well as its own.

All insurers are not created equal. When shopping around, it's worth measuring the records of competing agencies to evaluate if they pursue legitimate 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 quickly so that you can get your money back and move on with your life. If, on the other hand, an insurance firm has a record of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you should keep looking.

The Things You Need to Know About Subrogation

Subrogation is a concept that's well-known among legal and insurance professionals but often not by the policyholders they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is to your advantage to know the nuances of how it works. The more you know about it, the better decisions you can make with regard to your insurance policy.

An insurance policy you hold is a promise that, if something bad occurs, the business on the other end of the policy will make good in one way or another in a timely manner. If you get injured on the job, your company's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.

But since determining who is financially responsible for services or repairs is usually a tedious, lengthy affair – and delay sometimes compounds the damage to the victim – insurance firms usually decide to pay up front and assign blame later. They then need a way to recover the costs if, in the end, they weren't actually in charge of the expense.

Can You Give an Example?

You are in an auto accident. Another car crashed into yours. Police are called, you exchange insurance information, and you go on your way. You have comprehensive insurance and file a repair claim. Later police tell the insurance companies that the other driver was to blame and her insurance policy should have paid for the repair of your auto. How does your company get its funds back?

How Subrogation Works

This is where subrogation comes in. It is the process 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. Usually, only you can sue for damages to your self or property. But under subrogation law, your insurer is considered to have 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.

How Does This Affect Policyholders?

For one thing, if your insurance policy stipulated a deductible, your insurer wasn't the only one 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 insurer is timid on any subrogation case it might not win, it might choose to recoup its costs by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases enthusiastically, it is acting both in its own interests and in yours. 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 at fault), 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 over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as auto accident lawyer Powder Springs, Ga, successfully press a subrogation case, it will recover your expenses as well as its own.

All insurance agencies are not the same. When comparing, it's worth looking at the reputations of competing firms to find out whether they pursue valid subrogation claims; if they resolve those claims without dragging their feet; if they keep their accountholders apprised 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 insurer has a reputation of honoring claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you'll feel the sting later.

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