What You Need to Know About Subrogation

Subrogation is a concept that's well-known among legal and insurance professionals but often not by the customers who employ them. Even if it sounds complicated, it would be to your advantage to understand the steps of how it works. The more knowledgeable you are about it, the better decisions you can make about your insurance company.

Every insurance policy you have is an assurance that, if something bad occurs, the insurer of the policy will make good 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 party's insurance covers the damages.

But since ascertaining who is financially accountable for services or repairs is typically a heavily involved affair – and delay sometimes adds to the damage to the victim – insurance firms in many cases decide to pay up front and assign blame later. They then need a method to recover the costs if, once the situation is fully assessed, they weren't actually responsible for the payout.

Can You Give an Example?

You rush into the emergency room with a gouged finger. You give the receptionist your medical insurance card and he records your coverage details. You get stitches and your insurer gets a bill for the medical care. But the next morning, when you get to your workplace – where the injury happened – your boss hands you workers compensation paperwork to file. Your workers comp policy is actually responsible for the costs, not your medical insurance. The latter has a right to recover its costs somehow.

How Does Subrogation Work?

This is where subrogation comes in. It is the process that an insurance company uses to claim payment 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. Under ordinary circumstances, only you can sue for damages done to your self 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 starters, if you have a deductible, it wasn't just your insurer who 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 insurer is lax about bringing subrogation cases to court, it might choose to recover its costs by boosting your premiums. On the other hand, if it has a knowledgeable legal team and pursues 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 one-half at fault), you'll typically get $500 back, based on the laws in most states.

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 criminal defense law firm Springville UT, successfully press a subrogation case, it will recover your losses as well as its own.

All insurance agencies are not created equal. When shopping around, it's worth weighing the reputations of competing companies to determine whether they pursue valid subrogation claims; if they do so without delay; if they keep their clients informed as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, on the other hand, an insurance firm has a reputation of paying out claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you should keep looking.