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Subrogation is a concept that's well-known among insurance and legal companies but often not by the policyholders who employ them. Rather than leave it to the professionals, it is in your self-interest to know an overview of the process. The more knowledgeable you are, the better decisions you can make with regard to your insurance company.

Any insurance policy you hold is a promise 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 home is burglarized, for instance, your property insurance steps in to remunerate you or facilitate the repairs, subject to state property damage laws.

But since determining who is financially accountable for services or repairs is typically a heavily involved affair – and time spent waiting sometimes compounds the damage to the victim – insurance firms in many cases opt to pay up front and assign blame afterward. They then need a path to recover the costs if, when there is time to look at all the facts, they weren't responsible for the expense.

Let's Look at an Example

You are in an auto accident. Another car crashed 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 to blame and her insurance policy should have paid for the repair of your vehicle. How does your company get its funds back?

How Does Subrogation Work?

This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement after it has paid for something that should have been paid by some other entity. Some companies 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 person or property. But under subrogation law, your insurer is extended some of your rights for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.

How Does This Affect the Insured?

For starters, if you have a deductible, it wasn't just your insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to recover its losses by boosting your premiums. On the other hand, if it knows which cases it is owed and goes after them enthusiastically, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent to blame), you'll typically get $500 back, depending on your state laws.

Furthermore, if the total cost of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as medical malpractice Mclean Va, pursue subrogation and wins, it will recover your costs as well as its own.

All insurance agencies are not created equal. When shopping around, it's worth weighing the records of competing firms to evaluate whether they pursue winnable subrogation claims; if they resolve those claims without dragging their feet; if they keep their customers updated as the case continues; and if they then process successfully won reimbursements immediately so that you can get your money back and move on with your life. If, instead, an insurer has a record of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you'll feel the sting later.

Subrogation is a concept that's understood in legal and insurance circles but rarely by the people who hire them. Rather than leave it to the professionals, it is to your advantage to understand an overview of the process. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance company.

Any insurance policy you hold is a promise that, if something bad occurs, the company on the other end of the policy will make good in a timely fashion. If your home burns down, for instance, your property insurance steps in to compensate you or facilitate the repairs, subject to state property damage laws.

But since determining who is financially responsible for services or repairs is sometimes a confusing affair – and time spent waiting sometimes adds to the damage to the policyholder – insurance companies often decide to pay up front and figure out the blame afterward. They then need a method to regain the costs if, in the end, they weren't in charge of the payout.

For Example

You rush into the emergency room with a gouged finger. You hand the receptionist your health insurance card and she writes down your policy information. You get taken care of and your insurer gets a bill for the expenses. But the next afternoon, when you clock in at your place of employment – where the injury occurred – your boss hands you workers compensation paperwork to fill out. Your employer's workers comp policy is actually responsible for the expenses, not your health insurance policy. It has a vested interest in getting that money back somehow.

How Subrogation Works

This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement after it has paid for something that should have been paid by some other entity. Some companies 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 person or property. But under subrogation law, your insurer is considered to have 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 Individuals?

For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurer who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to be precise, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its costs by ballooning your premiums. On the other hand, if it has a competent legal team and goes after those cases efficiently, it is doing you a favor as well as itself. If all ten grand 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 responsible), you'll typically get $500 back, based on the laws in most states.

In addition, if the total cost 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 discrimination attorney 98466, successfully press a subrogation case, it will recover your costs as well as its own.

All insurers are not the same. When shopping around, it's worth looking up the records of competing firms to evaluate if they pursue legitimate subrogation claims; if they resolve those claims quickly; if they keep their clients posted as the case continues; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, on the other hand, an insurance company has a reputation of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, you should keep looking.