Subrogation and How It Affects Your Insurance

Subrogation is a term that's well-known among insurance and legal companies but sometimes not by the people they represent. Rather than leave it to the professionals, it would be in your self-interest to comprehend the steps of how it works. The more you know about it, the more likely relevant proceedings will work out favorably.

Any insurance policy you hold is a commitment that, if something bad happens to you, the firm that covers the policy will make good in a timely manner. If you get an injury 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 figuring out who is financially responsible for services or repairs is typically a heavily involved affair – and time spent waiting in some cases increases the damage to the policyholder – insurance firms often opt to pay up front and assign blame later. They then need a mechanism to recover the costs if, when all is said and done, they weren't responsible for the payout.

For Example

You are in a traffic-light accident. Another car crashed into yours. The police show up to assess the situation, you exchange insurance information, and you go on your way. You have comprehensive insurance and file a repair claim. Later it's determined that the other driver was entirely at fault and her insurance should have paid for the repair of your auto. How does your insurance company get its money back?

How Does Subrogation Work?

This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement 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 to your self or property. But under subrogation law, your insurance company is considered to have 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 Me?

For one thing, if your insurance policy stipulated a deductible, your insurance company 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 be precise, $1,000. If your insurer is timid on any subrogation case it might not win, it might choose 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 goes after those cases efficiently, it is acting both in its own interests and in yours. 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 one-half at fault), you'll typically get $500 back, based on the laws in most states.

In addition, if the total loss of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as car accident attorney Powder Springs GA, pursue subrogation and succeeds, it will recover your costs in addition to its own.

All insurers are not created equal. When comparing, it's worth looking up the reputations of competing firms to find out whether they pursue legitimate subrogation claims; if they do so without delay; if they keep their clients advised as the case continues; and if they then process successfully won reimbursements right away so that you can get your losses back and move on with your life. If, on the other hand, an insurer has a record of honoring claims that aren't its responsibility and then protecting its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.

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