Subrogation and How It Affects Your Insurance Policy

Subrogation is an idea that's understood among insurance and legal firms but sometimes not by the people who employ them. Rather than leave it to the professionals, it is to your advantage to know an overview of the process. The more knowledgeable you are, the more likely an insurance lawsuit will work out in your favor.

Any insurance policy you have is a promise that, if something bad occurs, the business that insures the policy will make restitutions in one way or another without unreasonable delay. If your property burns down, your property insurance steps in to compensate you or enable the repairs, subject to state property damage laws.

But since figuring out who is financially responsible for services or repairs is usually a heavily involved affair – and time spent waiting in some cases compounds the damage to the victim – insurance firms usually decide to pay up front and assign blame later. They then need a mechanism to regain the costs if, when all the facts are laid out, they weren't actually in charge of the payout.

For Example

You are in a traffic-light accident. Another car ran into yours. Police are called, you exchange insurance information, and you go on your way. You have comprehensive insurance and file a repair claim. Later police tell the insurance companies that the other driver was entirely at fault and her insurance should have paid for the repair of your car. How does your insurance company get its money back?

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 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 given some of your rights in exchange for having taken care of 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 Individuals?

For one thing, 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 – to be precise, $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to recoup its expenses by upping your premiums. On the other hand, if it has a competent legal team and goes after them 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 culpable), you'll typically get $500 back, based on the laws in most states.

Additionally, if the total loss of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as abogado de accidentes de auto Mableton GA, pursue subrogation and wins, it will recover your expenses as well as its own.

All insurance companies are not created equal. When comparing, it's worth looking up the records of competing companies to find out if they pursue valid subrogation claims; if they do so with some expediency; if they keep their accountholders informed 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 insurance agency has a reputation of paying out claims that aren't its responsibility and then covering its profitability by raising your premiums, you'll feel the sting later.

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