What You Need to Know About Subrogation

Subrogation is a concept that's understood in insurance and legal circles but sometimes not by the policyholders they represent. Even if it sounds complicated, it would be in your benefit to understand the nuances of how it works. The more information you have about it, the better decisions you can make about your insurance company.

Every insurance policy you own is a commitment that, if something bad occurs, the firm that insures the policy will make restitutions in a timely manner. If your home suffers fire damage, for example, your property insurance agrees to remunerate you or facilitate the repairs, subject to state property damage laws.

But since determining who is financially responsible for services or repairs is regularly a time-consuming affair – and delay often compounds the damage to the victim – insurance firms in many cases opt to pay up front and figure out the blame later. They then need a means to recover the costs if, when there is time to look at all the facts, they weren't responsible for the expense.

Let's Look at an Example

You are in a traffic-light 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 that pays for the repairs right away. Later police tell the insurance companies that the other driver was to blame and her insurance policy should have paid for the repair of your vehicle. How does your insurance company get its funds back?

How Does Subrogation Work?

This is where subrogation comes in. It is the method that an insurance company uses to claim payment 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. Under ordinary circumstances, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is given some of your rights 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.

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 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 expenses by upping your premiums. On the other hand, if it knows which cases it is owed and goes after those cases efficiently, it is doing you a favor as well as itself. If all is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half accountable), you'll typically get $500 back, based on the laws in most states.

Furthermore, if the total cost of an accident is over 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 Attorney Hillsboro Or, successfully press a subrogation case, it will recover your expenses in addition to its own.

All insurers are not created equal. When shopping around, it's worth looking up the reputations of competing agencies to evaluate whether they pursue valid subrogation claims; if they do so fast; if they keep their accountholders advised as the case continues; and if they then process successfully won reimbursements right away so that you can get your funding 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 should keep looking.