The Things Every Policy holder Ought to Know About Subrogation

Subrogation is a term that's well-known among legal and insurance professionals but sometimes not by the customers they represent. Even if it sounds complicated, it would be in your benefit to understand the steps of the process. The more knowledgeable you are, the better decisions you can make about your insurance policy.

Any insurance policy you own is a promise that, if something bad occurs, the insurer of the policy will make good without unreasonable delay. If your real estate burns down, for instance, your property insurance agrees 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 regularly a time-consuming affair – and time spent waiting sometimes increases the damage to the victim – insurance firms usually opt to pay up front and figure out the blame later. They then need a mechanism to recoup the costs if, in the end, they weren't in charge of the expense.

Can You Give an Example?

You are in a traffic-light accident. Another car ran into yours. The police show up to assess the situation, 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 at fault and his insurance policy should have paid for the repair of your auto. 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 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. Ordinarily, only you can sue for damages done to your self 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 originally due to you, because it has covered the amount already.

Why Should I Care?

For starters, if your insurance policy stipulated a deductible, it wasn't just your insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to the tune of $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to recover its losses by upping your premiums and call it a day. On the other hand, if it has a capable legal team and goes after them aggressively, it is acting both in its own interests and in yours. If all of the money 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 responsible), you'll typically get half your deductible back, depending on the laws in your state.

Moreover, if the total loss of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as car accident attorney Canton, ga, pursue subrogation and succeeds, it will recover your costs in addition to its own.

All insurance companies are not created equal. When shopping around, it's worth measuring the records of competing agencies to evaluate whether they pursue winnable subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their customers informed as the case proceeds; 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, instead, an insurance firm has a record of honoring claims that aren't its responsibility and then covering its profit margin by raising your premiums, you should keep looking.

Subrogation and How It Affects Your Insurance Policy

Subrogation is an idea that's well-known in legal and insurance circles but often not by the people they represent. Even if you've never heard the word before, it would be to your advantage to know the nuances of the process. The more information you have, the more likely an insurance lawsuit will work out in your favor.

An insurance policy you hold is a commitment that, if something bad occurs, the business that insures the policy will make good without unreasonable delay. If you get hurt on the job, your employer's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.

But since ascertaining who is financially responsible for services or repairs is regularly a tedious, lengthy affair – and time spent waiting often increases the damage to the victim – insurance firms often decide to pay up front and figure out the blame after the fact. They then need a mechanism to regain the costs if, ultimately, they weren't actually in charge of the expense.

Let's Look at an Example

Your stove catches fire and causes $10,000 in house damages. Fortunately, you have property insurance and it pays out your claim in full. However, the insurance investigator finds out that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him responsible for the damages. You already have your money, but your insurance firm is out ten grand. What does the firm do next?

How Subrogation Works

This is where subrogation comes in. It is the method 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. Usually, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is given some of your rights in exchange 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 Do I Need to Know This?

For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurance company 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 insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its losses by ballooning your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and goes after those cases aggressively, it is doing you a favor as well as itself. 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 one-half at fault), you'll typically get half your deductible 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 car injury lawyer Dunwoody ga, 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 contrasting the records of competing companies to evaluate whether they pursue valid subrogation claims; if they resolve those claims fast; if they keep their customers apprised 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 safeguarding its bottom line by raising your premiums, you should keep looking.

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