The Things You Need to Know About Subrogation

Subrogation is a term that's understood among insurance and legal companies but sometimes not by the policyholders who hire them. Even if it sounds complicated, it would be to your advantage to know the nuances of the process. The more knowledgeable you are, the more likely it is that relevant proceedings will work out favorably.

Every insurance policy you have is a commitment that, if something bad happens to you, the insurer of the policy will make good without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and the courts, when necessary) determine who was to blame and that party's insurance covers the damages.

But since ascertaining who is financially responsible for services or repairs is usually a heavily involved affair – and time spent waiting sometimes adds to the damage to the victim – insurance companies usually decide to pay up front and assign blame later. They then need a means to get back the costs if, ultimately, they weren't responsible for the payout.

For Example

You go to the doctor's office with a deeply cut finger. You hand the receptionist your medical insurance card and she records your policy details. You get stitches and your insurance company is billed for the services. But on the following afternoon, when you arrive at work – where the accident happened – you are given workers compensation paperwork to turn in. Your company's workers comp policy is in fact responsible for the costs, not your medical insurance company. The latter has a right to recover its money in some way.

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. Ordinarily, 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 in exchange for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.

Why Do I Need to Know This?

For a start, if your insurance policy stipulated a deductible, it wasn't just your insurance company who 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 unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its costs by increasing your premiums. On the other hand, if it has a competent legal team and goes after them efficiently, 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 to blame), you'll typically get $500 back, depending on your state laws.

Furthermore, if the total loss 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 how do i find a real estate lawyer Williams Bay, WI, successfully press a subrogation case, it will recover your expenses as well as its own.

All insurers are not the same. When comparing, it's worth scrutinizing the records of competing companies to determine if they pursue valid subrogation claims; if they resolve those claims without delay; if they keep their customers posted as the case proceeds; 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 reputation of paying out claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you should keep looking.