What You Need to Know About Subrogation

Subrogation is a concept that's understood among legal and insurance firms but rarely by the customers they represent. Even if you've never heard the word before, it would be in your self-interest to comprehend an overview of how it works. The more knowledgeable you are about it, the more likely it is that an insurance lawsuit will work out in your favor.

Any insurance policy you hold is a promise that, if something bad happens to you, the company on the other end of the policy will make restitutions in one way or another without unreasonable delay. If a blizzard damages your house, your property insurance agrees to pay you or enable the repairs, subject to state property damage laws.

But since ascertaining who is financially responsible for services or repairs is usually a confusing affair – and delay in some cases adds to the damage to the victim – insurance companies in many cases opt to pay up front and assign blame later. They then need a method to get back the costs if, when all the facts are laid out, they weren't responsible for the payout.

Can You Give an Example?

You arrive at the hospital with a sliced-open finger. You hand the receptionist your health insurance card and he writes down your plan information. You get taken care of and your insurer is billed for the expenses. But on the following afternoon, when you get to work – where the accident occurred – you are given workers compensation paperwork to fill out. Your employer's workers comp policy is in fact responsible for the bill, not your health insurance company. It has a vested interest in getting that money back somehow.

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 to your person or property. But under subrogation law, your insurer is considered to have some of your rights in exchange for having taken care of the damages. It can go after the money 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, it wasn't just your insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to recover its costs by upping your premiums. On the other hand, if it has a competent legal team and goes after them enthusiastically, it is doing you a favor as well as itself. If all $10,000 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 at fault), you'll typically get $500 back, depending on the laws in your state.

In addition, if the total price 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 immigration defense attorney Magna Ut, successfully press a subrogation case, it will recover your losses as well as its own.

All insurance companies are not created equal. When shopping around, it's worth looking up the reputations of competing agencies to evaluate if they pursue winnable subrogation claims; if they resolve those claims without delay; if they keep their clients posted as the case proceeds; 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 record of paying out claims that aren't its responsibility and then covering its income by raising your premiums, even attractive rates won't outweigh the eventual headache.