The Things You Need to Know About Subrogation

Subrogation is a term that's understood among legal and insurance firms but often not by the customers they represent. Rather than leave it to the professionals, it would be in your self-interest to understand an overview of how it works. The more you know about it, the better decisions you can make with regard to your insurance policy.

Any insurance policy you own is a promise that, if something bad happens to you, the insurer of the policy will make restitutions without unreasonable delay. If your vehicle is hit, insurance adjusters (and police, when necessary) decide who was at fault and that party's insurance covers the damages.

But since determining who is financially accountable for services or repairs is usually a time-consuming affair – and time spent waiting often increases the damage to the victim – insurance firms usually decide to pay up front and figure out the blame afterward. They then need a mechanism 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 are in a vehicle accident. Another car crashed into yours. The police show up to assess the situation, you exchange insurance information, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later police tell the insurance companies that the other driver was entirely at fault and her insurance policy should have paid for the repair of your car. How does your insurance company get its funds back?

How Subrogation Works

This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. 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. Usually, only you can sue for damages to your self 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 Does This Matter to Me?

For a start, 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 – to the tune of $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recoup its costs by ballooning your premiums. On the other hand, if it knows which cases it is owed and pursues them efficiently, 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 one-half accountable), 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 costly. If your insurance company or its property damage lawyers, such as bk personal 66061, successfully press a subrogation case, it will recover your losses as well as its own.

All insurers are not the same. When shopping around, it's worth looking at the reputations of competing firms to determine if they pursue legitimate subrogation claims; if they do so quickly; if they keep their customers posted as the case continues; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, on the other hand, an insurance company has a reputation of honoring claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.