What You Need to Know About Subrogation

Subrogation is an idea that's understood in insurance and legal circles but rarely by the policyholders they represent. Even if it sounds complicated, it is in your benefit to comprehend the nuances of the process. The more you know about it, the better decisions you can make with regard to your insurance company.

Any insurance policy you own is a commitment that, if something bad occurs, the company that insures the policy will make good in one way or another without unreasonable delay. If your home is robbed, your property insurance steps in to remunerate you or pay for the repairs, subject to state property damage laws.

But since figuring out who is financially responsible for services or repairs is regularly a time-consuming affair – and time spent waiting often adds to the damage to the victim – insurance firms in many cases opt to pay up front and figure out the blame after the fact. They then need a method to recover the costs if, in the end, they weren't responsible for the payout.

Can You Give an Example?

You rush into the hospital with a sliced-open finger. You give the receptionist your health insurance card and he takes down your coverage information. You get taken care of and your insurer gets a bill for the services. But the next day, when you get to your place of employment – where the accident occurred – you are given workers compensation forms to file. Your employer's workers comp policy is actually responsible for the invoice, not your health insurance. It has a vested interest in getting that money back in some way.

How Does Subrogation Work?

This is where subrogation comes in. It is the method 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 done to your person or property. But under subrogation law, your insurer is extended some of your rights for making good on 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 Individuals?

For one thing, if your insurance policy stipulated a deductible, your insurer wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to recover its costs by upping your premiums and call it a day. On the other hand, if it has a competent legal team and pursues those cases aggressively, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found one-half to blame), you'll typically get half your deductible back, based on the laws in most states.

Additionally, 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 personal injury claims Lithia Springs, GA, successfully press a subrogation case, it will recover your costs as well as its own.

All insurers are not the same. When comparing, it's worth contrasting the records of competing companies to determine whether they pursue valid subrogation claims; if they resolve those claims with some expediency; if they keep their clients updated 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 reputation of honoring claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you'll feel the sting later.

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