Subrogation and How It Affects You

Subrogation is a concept that's well-known among legal and insurance companies but often not by the policyholders who employ them. Even if it sounds complicated, it would be in your self-interest to comprehend the nuances of the process. The more knowledgeable you are about it, the more likely it is that relevant proceedings will work out favorably.

An insurance policy you own is an assurance that, if something bad occurs, the business that insures the policy will make restitutions in a timely fashion. If a fire damages your property, your property insurance steps in to repay you or pay for the repairs, subject to state property damage laws.

But since ascertaining who is financially responsible for services or repairs is sometimes a confusing affair – and time spent waiting in some cases compounds the damage to the victim – insurance firms usually opt to pay up front and assign blame afterward. They then need a path to regain the costs if, once the situation is fully assessed, they weren't actually responsible for the expense.

Can You Give an Example?

You arrive at the emergency room with a gouged finger. You give the receptionist your medical insurance card and he takes down your policy information. You get stitches and your insurer gets an invoice for the medical care. But the next afternoon, when you clock in at your workplace – where the injury occurred – your boss hands you workers compensation paperwork to file. Your workers comp policy is in fact responsible for the expenses, not your medical insurance. The latter has an interest in recovering its costs in some way.

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 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 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.

Why Should I Care?

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 be precise, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its expenses by upping your premiums. On the other hand, if it knows which cases it is owed and goes after them enthusiastically, it is doing you a favor as well as itself. If all 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 accountable), you'll typically get half your deductible back, depending on the laws in your state.

Additionally, if the total expense of an accident is more than 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 business law salem ut, successfully press a subrogation case, it will recover your losses in addition to its own.

All insurance companies are not created equal. When shopping around, it's worth contrasting the records of competing agencies to find out if they pursue legitimate subrogation claims; if they resolve those claims quickly; if they keep their accountholders updated as the case continues; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, instead, an insurance agency has a record of honoring claims that aren't its responsibility and then covering its income by raising your premiums, you'll feel the sting later.