The Things You Need to Know About Subrogation

Subrogation is a concept that's understood among legal and insurance firms but sometimes not by the customers who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your self-interest to know the nuances of the process. The more you know, the better decisions you can make about your insurance policy.

Every insurance policy you hold is a commitment that, if something bad occurs, the business that insures the policy will make good in a timely manner. If you get injured while you're on the clock, for example, your company's workers compensation insurance pays out for medical services. Employment lawyers handle the details; you just get fixed up.

But since determining who is financially accountable for services or repairs is sometimes a time-consuming affair – and delay in some cases compounds the damage to the policyholder – insurance companies in many cases opt to pay up front and figure out the blame after the fact. They then need a means to recover the costs if, when there is time to look at all the facts, they weren't actually responsible for the payout.

For Example

Your garage catches fire and causes $10,000 in home damages. Luckily, you have property insurance and it pays out your claim in full. However, the assessor assigned to your case finds out that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him responsible for the damages. You already have your money, but your insurance agency is out $10,000. What does the agency do next?

How Subrogation Works

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. Ordinarily, only you can sue for damages to your person or property. But under subrogation law, your insurer is extended 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.

Why Should I Care?

For a start, if your insurance policy stipulated a deductible, your insurer wasn't the only one that 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 unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its expenses by increasing your premiums and call it a day. On the other hand, if it has a competent legal team and pursues them efficiently, it is acting both in its own interests and in yours. 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 50 percent to blame), you'll typically get $500 back, based on the laws in most states.

In addition, if the total expense 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 Auto accident Attorney in Mableton, Ga, pursue subrogation and succeeds, it will recover your losses in addition to its own.

All insurers are not created equal. When comparing, it's worth measuring the records of competing firms to evaluate whether they pursue valid subrogation claims; if they do so with some expediency; if they keep their accountholders informed as the case goes on; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, instead, an insurer has a record of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, even attractive rates won't outweigh the eventual headache.