The Things Every Policy holder Ought to Know About Subrogation

Subrogation is an idea that's understood among legal and insurance professionals but rarely by the customers who hire them. Rather than leave it to the professionals, it would be in your benefit to know the steps of how it works. The more knowledgeable you are, the better decisions you can make with regard to your insurance policy.

Any insurance policy you hold is a promise that, if something bad happens to you, the insurer of the policy will make restitutions in a timely manner. If you get an injury at work, your company's workers compensation pays out for medical services. Employment lawyers handle the details; you just get fixed up.

But since ascertaining who is financially responsible for services or repairs is regularly a time-consuming affair – and delay often adds to the damage to the victim – insurance firms in many cases decide to pay up front and figure out the blame later. They then need a path to regain the costs if, once the situation is fully assessed, they weren't responsible for the payout.

For Example

You are in a vehicle accident. Another car ran into yours. Police are called, 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 at fault and his insurance policy should have paid for the repair of your vehicle. How does your insurance 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 after it has paid for something that should have been paid by some other entity. 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 done to your person or property. But under subrogation law, your insurance company is extended 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 one thing, if you have a deductible, it wasn't just your insurance company 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 lax about bringing subrogation cases to court, it might opt to recoup its losses by increasing your premiums. On the other hand, if it has a proficient legal team and goes after them efficiently, it is doing you a favor as well as itself. If all is recovered, you will get your full $1,000 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.

Additionally, if the total expense 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 criminal defense law firm Provo UT, pursue subrogation and succeeds, it will recover your losses in addition to its own.

All insurance agencies are not the same. When shopping around, it's worth weighing the reputations of competing companies to evaluate if they pursue valid subrogation claims; if they do so without delay; if they keep their accountholders posted as the case continues; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, on the other hand, an insurer has a reputation of paying out claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you'll feel the sting later.

Subrogation and How It Affects You

Subrogation is a concept that's understood in insurance and legal circles but rarely by the customers they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be to your advantage to know the steps of how it works. The more you know about it, the better decisions you can make about your insurance policy.

Every insurance policy you have is an assurance that, if something bad happens to you, the firm on the other end of the policy will make restitutions without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and the judicial system, 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 regularly a time-consuming affair – and delay in some cases increases the damage to the victim – insurance firms usually opt to pay up front and figure out the blame after the fact. They then need a path to recover the costs if, when all the facts are laid out, they weren't in charge of the payout.

For Example

Your kitchen catches fire and causes $10,000 in house damages. Happily, 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 a reasonable possibility that a judge would find him to blame for the damages. The house has already been fixed up in the name of expediency, but your insurance agency is out $10,000. What does the agency do next?

How Does Subrogation Work?

This is where subrogation comes in. It is the way that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. Some companies 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 self or property. But under subrogation law, your insurance company is extended 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 Does This Matter to Me?

For one thing, if you have a deductible, it wasn't just your insurance company who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to recover its expenses by upping your premiums and call it a day. On the other hand, if it has a capable legal team and goes after them enthusiastically, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent culpable), you'll typically get half your deductible back, based on the laws in most states.

Moreover, 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 Criminal Lawyer Pleasant Grove UT, pursue subrogation and wins, it will recover your costs in addition to its own.

All insurers are not the same. When comparing, it's worth comparing the reputations of competing agencies to evaluate if they pursue valid subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their policyholders posted as the case continues; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, instead, an insurance agency 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.