The Things You Need to Know About Subrogation

Subrogation is a concept that's understood among insurance and legal companies but rarely by the policyholders they represent. Rather than leave it to the professionals, it would be in your self-interest to know an overview of the process. The more information you have, the better decisions you can make with regard to your insurance company.

Any insurance policy you own is a promise that, if something bad happens to you, the business that insures the policy will make good without unreasonable delay. If your real estate burns down, for instance, your property insurance steps in to remunerate you or facilitate the repairs, subject to state property damage laws.

But since figuring out who is financially responsible for services or repairs is sometimes a confusing affair – and delay sometimes adds to the damage to the victim – insurance companies in many cases opt to pay up front and assign blame after the fact. They then need a method to recover the costs if, in the end, they weren't responsible for the expense.

Let's Look at an Example

You are in a vehicle accident. Another car ran 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 it's determined that the other driver was entirely to blame and her insurance should have paid for the repair of your car. How does your company get its money back?

How Subrogation Works

This is where subrogation comes in. It is the process 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. Under ordinary circumstances, only you can sue for damages to your person or property. But under subrogation law, your insurance company is considered to have some of your rights in exchange 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 Me?

For a start, if your insurance policy stipulated 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 – to be precise, $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to get back its expenses by boosting your premiums. On the other hand, if it knows which cases it is owed and goes after those cases aggressively, it is doing you a favor as well as itself. If all $10,000 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 responsible), you'll typically get $500 back, based on the laws in most states.

Moreover, 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 work injury lawyer paddock lake wi, successfully press a subrogation case, it will recover your costs as well as its own.

All insurers are not the same. When shopping around, it's worth looking up the records of competing agencies to find out if they pursue legitimate subrogation claims; if they do so fast; if they keep their customers updated as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your money 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 protecting its income by raising your premiums, you should keep looking.

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