What Every Insurance Policy holder Ought to Know About Subrogation

Subrogation is an idea that's well-known in insurance and legal circles but sometimes not by the customers who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your self-interest to know the nuances of the process. The more knowledgeable you are, the more likely it is that an insurance lawsuit will work out favorably.

Every insurance policy you hold is a promise that, if something bad occurs, the company that insures the policy will make good in one way or another without unreasonable delay. If a windstorm damages your house, your property insurance steps in to repay you or facilitate the repairs, subject to state property damage laws.

But since determining who is financially accountable for services or repairs is often a time-consuming affair – and delay often increases the damage to the victim – insurance companies in many cases opt to pay up front and figure out the blame afterward. They then need a method to get back the costs if, once the situation is fully assessed, they weren't in charge of the expense.

For Example

Your living room catches fire and causes $10,000 in house damages. Luckily, you have property insurance and it takes care of the repair expenses. However, in its investigation it discovers that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him accountable for the damages. You already have your money, but your insurance firm is out $10,000. What does the firm do next?

How Does Subrogation Work?

This is where subrogation comes in. It is the method 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. Ordinarily, 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.

Why Do I Need to Know This?

For a start, 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 lost some money too – to be precise, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its expenses by raising your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them enthusiastically, it is acting both in its own interests and in yours. 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 accountable), you'll typically get $500 back, depending on your state laws.

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 costly. If your insurance company or its property damage lawyers, such as Auto Accident Lawyer in Mableton, Ga, successfully press a subrogation case, it will recover your losses in addition to its own.

All insurers are not created equal. When shopping around, it's worth looking up the reputations of competing companies to determine if they pursue valid subrogation claims; if they resolve those claims fast; if they keep their clients posted as the case continues; 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 insurer has a record of paying out claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you should keep looking.