Subrogation and How It Affects Your Insurance

Subrogation is a concept that's well-known among legal and insurance companies but rarely by the people they represent. Rather than leave it to the professionals, it is to your advantage to comprehend the steps of the process. The more knowledgeable you are, the more likely it is that an insurance lawsuit will work out in your favor.

Every insurance policy you hold is a promise that, if something bad occurs, the company on the other end of the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and the judicial system, when necessary) determine who was to blame and that person's insurance pays out.

But since ascertaining who is financially responsible for services or repairs is sometimes a time-consuming affair – and time spent waiting often increases the damage to the victim – insurance firms usually opt to pay up front and figure out the blame after the fact. They then need a mechanism to regain the costs if, ultimately, they weren't actually in charge of the payout.

For Example

Your bedroom catches fire and causes $10,000 in home damages. Fortunately, you have property insurance and it pays out your claim in full. However, in its investigation it finds out that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him liable for the loss. The house has already been repaired in the name of expediency, but your insurance company is out all that money. What does the company do next?

How Subrogation Works

This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement after it has paid for something that should have been paid by some other entity. 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 self or property. But under subrogation law, your insurance company 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 the Insured?

For one thing, 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 insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its costs by increasing your premiums and call it a day. On the other hand, if it has a capable legal team and goes after those cases enthusiastically, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half responsible), you'll typically get $500 back, based on the laws in most states.

Moreover, if the total loss of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as auto accident lawyer Lithia springs GA, pursue subrogation and wins, it will recover your expenses as well as its own.

All insurance companies are not created equal. When shopping around, it's worth examining the reputations of competing companies to evaluate whether they pursue legitimate subrogation claims; if they do so in a reasonable amount of time; if they keep their accountholders advised as the case goes on; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, instead, an insurer has a record of honoring claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you'll feel the sting later.