Subrogation is a concept that's well-known among legal and insurance companies but sometimes not by the customers they represent. Even if you've never heard the word before, it would be in your self-interest to comprehend the nuances of how it works. The more information you have, the better decisions you can make with regard to your insurance company.

Any insurance policy you have is an assurance that, if something bad happens to you, the insurer of the policy will make good in one way or another without unreasonable delay. If you get hurt at work, for instance, your company's workers compensation insurance pays out for medical services. Employment lawyers handle the details; you just get fixed up.

But since figuring out who is financially accountable for services or repairs is often a time-consuming affair – and time spent waiting sometimes 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 way to recover the costs if, in the end, they weren't actually in charge of the payout.

Let's Look at an Example

You head to the hospital with a sliced-open finger. You hand the nurse your health insurance card and he records your policy information. You get stitches and your insurance company gets a bill for the tab. But on the following morning, when you clock in at your place of employment – where the injury occurred – your boss hands you workers compensation forms to turn in. Your employer's workers comp policy is in fact responsible for the expenses, not your health insurance company. It has a vested interest in getting that money back somehow.

How Does Subrogation Work?

This is where subrogation comes in. It is the way that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. Some companies 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 self or property. But under subrogation law, your insurance company is considered to have some of your rights for having taken care of 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 you have a deductible, your insurance company wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to the tune of $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to get back its losses by ballooning your premiums and call it a day. On the other hand, if it has a proficient legal team and pursues those cases efficiently, it is doing you a favor as well as itself. If all ten grand 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 culpable), you'll typically get half your deductible back, depending on the laws in your state.

Furthermore, if the total cost of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as car accident lawyer Lithia Springs GA, pursue subrogation and succeeds, it will recover your losses as well as its own.

All insurance companies are not created equal. When comparing, it's worth looking at the records of competing companies to evaluate whether they pursue legitimate subrogation claims; if they resolve those claims quickly; if they keep their clients updated as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, instead, an insurance firm has a record of paying out claims that aren't its responsibility and then covering its profitability by raising your premiums, you should keep looking.

Subrogation is an idea that's understood among insurance and legal companies but rarely by the customers who employ them. Even if you've never heard the word before, it would be in your self-interest to know an overview of the process. The more knowledgeable you are about it, the better decisions you can make about your insurance policy.

Any insurance policy you hold is an assurance that, if something bad happens to you, the company that covers the policy will make restitutions in one way or another without unreasonable delay. If you get hurt at work, your company's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.

But since figuring out who is financially accountable for services or repairs is typically a time-consuming affair – and time spent waiting often increases the damage to the policyholder – insurance firms often decide to pay up front and figure out the blame after the fact. They then need a mechanism to recoup the costs if, when all is said and done, they weren't actually responsible for the expense.

Can You Give an Example?

You are in a highway accident. Another car crashed into yours. The police show up to assess the situation, you exchange insurance information, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later it's determined that the other driver was entirely to blame and her insurance should have paid for the repair of your vehicle. How does your insurance company get its funds back?

How Subrogation Works

This is where subrogation comes in. It is the way that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. Some companies 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 self or property. But under subrogation law, your insurance company is extended some of your rights in exchange 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 the Insured?

For starters, if you have a deductible, it wasn't just your insurance company 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 lax about bringing subrogation cases to court, it might opt to get back its expenses by raising your premiums and call it a day. On the other hand, if it has a capable legal team and goes after those cases efficiently, 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 50 percent at fault), you'll typically get half your deductible back, depending on the laws in your state.

In addition, if the total loss 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 Auto Accident Lawyer in Marietta, Ga, successfully press a subrogation case, it will recover your losses in addition to its own.

All insurers are not the same. When comparing, it's worth looking up the records of competing agencies to evaluate whether they pursue valid subrogation claims; if they do so quickly; if they keep their accountholders advised as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, on the other hand, an insurance firm has a record of honoring claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you'll feel the sting later.

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.