What Every Insurance Policyholder Ought to Know About Subrogation

Subrogation is an idea that's well-known among insurance and legal professionals but sometimes not by the policyholders they represent. Rather than leave it to the professionals, it is to your advantage to know the steps of the process. The more you know, the more likely it is that relevant proceedings will work out favorably.

Any insurance policy you hold is a promise that, if something bad happens to you, the business that covers the policy will make good without unreasonable delay. If your house is robbed, your property insurance agrees to repay you or enable the repairs, subject to state property damage laws.

But since determining who is financially accountable for services or repairs is typically a heavily involved affair – and delay in some cases increases the damage to the policyholder – insurance companies usually decide to pay up front and figure out the blame later. They then need a way to recoup the costs if, when all the facts are laid out, they weren't responsible for the payout.

For Example

You are in a car accident. Another car crashed into yours. The police show up to assess the situation, you exchange insurance details, 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 entirely to blame and her insurance should have paid for the repair of your car. 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 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. Ordinarily, only you can sue for damages done 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 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 have a stake in the outcome as well – to be precise, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its losses by ballooning your premiums. On the other hand, if it has a proficient legal team and pursues those cases aggressively, it is doing you a favor as well as itself. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent responsible), you'll typically get half your deductible back, based on the laws in most states.

Moreover, 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 divorce 66061, successfully press a subrogation case, it will recover your expenses as well as its own.

All insurance agencies are not created equal. When comparing, it's worth measuring the records of competing firms to find out if they pursue valid subrogation claims; if they resolve those claims with some expediency; if they keep their clients posted as the case continues; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, on the other hand, 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'll feel the sting later.