Subrogation and How It Affects Your Insurance Policy

Subrogation is an idea that's understood in legal and insurance circles but often not by the customers who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your benefit to understand the steps of the process. The more information you have, the better decisions you can make with regard to your insurance policy.

Any insurance policy you hold is a commitment that, if something bad occurs, the company on the other end of the policy will make restitutions without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and the judicial system, when necessary) determine who was at fault 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 time spent waiting sometimes compounds the damage to the policyholder – insurance companies usually decide to pay up front and assign blame after the fact. They then need a path to recover the costs if, in the end, they weren't in charge of the payout.

Can You Give an Example?

You head to the emergency room with a sliced-open finger. You give the receptionist your health insurance card and she takes down your coverage information. You get stitched up and your insurance company gets a bill for the tab. But on the following afternoon, when you clock in at your workplace – where the accident occurred – your boss hands you workers compensation forms to fill out. Your company's workers comp policy is in fact responsible for the hospital trip, 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 way 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 self or property. But under subrogation law, your insurance company is given 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 Should I Care?

For a start, if your insurance policy stipulated a deductible, your insurance company wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recover its losses by increasing your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and goes after them efficiently, it is acting both in its own interests and in yours. 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 responsible), you'll typically get half your deductible back, depending on the laws in your state.

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 fathers rights lawyer Summerlin nv, successfully press a subrogation case, it will recover your losses as well as its own.

All insurance companies are not created equal. When comparing, it's worth looking up the records of competing firms to determine whether they pursue winnable subrogation claims; if they do so in a reasonable amount of time; if they keep their policyholders apprised as the case continues; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, instead, an insurance company has a reputation of honoring claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you'll feel the sting later.