Subrogation and How It Affects You

Subrogation is a term that's well-known among insurance and legal professionals but rarely by the people who employ them. Even if it sounds complicated, it would be in your self-interest to understand the steps of the process. The more you know, the more likely an insurance lawsuit will work out in your favor.

An insurance policy you have is an assurance that, if something bad happens to you, the insurer of the policy will make restitutions in one way or another in a timely fashion. If your property suffers fire damage, your property insurance agrees to remunerate you or pay for the repairs, subject to state property damage laws.

But since figuring out who is financially accountable for services or repairs is sometimes a confusing affair – and time spent waiting in some cases increases the damage to the victim – insurance firms usually decide to pay up front and assign blame afterward. They then need a path to recoup the costs if, when all the facts are laid out, they weren't actually responsible for the payout.

Can You Give an Example?

You arrive at the hospital with a gouged finger. You hand the receptionist your medical insurance card and she takes down your plan details. You get taken care of and your insurer gets a bill for the services. But on the following morning, when you arrive at work – where the injury occurred – your boss hands you workers compensation forms to fill out. Your workers comp policy is actually responsible for the expenses, not your medical insurance company. The latter has an interest in recovering its costs in some way.

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. Normally, only you can sue for damages to your self or property. But under subrogation law, your insurer is considered to have 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 Do I Need to Know This?

For a start, if you have 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 the tune of $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recover its losses by boosting your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and pursues them enthusiastically, 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 accountable), you'll typically get half your deductible back, based on the laws in most states.

Furthermore, 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 legal counsel spanish fork ut, pursue subrogation and succeeds, it will recover your costs in addition to its own.

All insurers are not created equal. When shopping around, it's worth examining the reputations of competing agencies to find out if they pursue winnable subrogation claims; if they resolve those claims without dragging their feet; if they keep their customers posted as the case proceeds; 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 honoring claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you should keep looking.