The Things Every Insurance Policy holder Ought to Know About Subrogation

Subrogation is a term that's well-known among legal and insurance firms but rarely by the people they represent. Even if it sounds complicated, it would be in your benefit to comprehend the steps of how it works. The more you know, the better decisions you can make with regard to your insurance company.

Any insurance policy you own is an assurance that, if something bad happens to you, the business on the other end of the policy will make good without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and the courts, when necessary) decide who was at fault and that person's insurance covers the damages.

But since figuring out who is financially accountable for services or repairs is typically a time-consuming affair – and time spent waiting in some cases adds to the damage to the policyholder – insurance companies often decide to pay up front and assign blame after the fact. They then need a mechanism to recoup the costs if, in the end, they weren't responsible for the payout.

Let's Look at an Example

Your kitchen catches fire and causes $10,000 in house damages. Happily, you have property insurance and it pays for the repairs. However, the assessor assigned to your case finds out that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him responsible for the loss. The home has already been repaired in the name of expediency, but your insurance firm is out ten grand. What does the firm do next?

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. Usually, only you can sue for damages to your person or property. But under subrogation law, your insurer is given some of your rights in exchange for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.

Why Do I Need to Know This?

For a start, if your insurance policy stipulated a deductible, it wasn't just your insurer who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to be precise, $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to recoup its losses by boosting your premiums. On the other hand, if it has a competent legal team and goes after them efficiently, it is acting both in its own interests and in yours. If all ten grand 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, depending on your state laws.

Moreover, if the total price 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 Auto accident lawyer Norcross GA, pursue subrogation and succeeds, it will recover your expenses as well as its own.

All insurance companies are not the same. When comparing, it's worth measuring the records of competing companies to find out if they pursue winnable subrogation claims; if they do so fast; if they keep their clients posted as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, on the other hand, an insurance firm has a reputation of honoring claims that aren't its responsibility and then covering its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.