Subrogation and How It Affects Your Insurance

Subrogation is a concept that's well-known in legal and insurance circles but rarely by the customers they represent. Rather than leave it to the professionals, it would be in your benefit to know the nuances of how it works. The more you know, the more likely an insurance lawsuit will work out favorably.

An insurance policy you own is a commitment that, if something bad happens to you, the firm that covers the policy will make restitutions in one way or another in a timely manner. If a fire damages your property, your property insurance steps in to remunerate you or pay for the repairs, subject to state property damage laws.

But since determining who is financially accountable for services or repairs is usually a heavily involved affair – and delay often increases the damage to the policyholder – insurance firms often opt to pay up front and assign blame later. They then need a path to recoup the costs if, ultimately, they weren't in charge of the expense.

For Example

You are in a vehicle accident. Another car collided with yours. Police are called, you exchange insurance details, 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 to blame and his insurance should have paid for the repair of your vehicle. How does your company get its money back?

How Subrogation Works

This is where subrogation comes in. It is the method that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. 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 done to your person or property. But under subrogation law, your insurer is given some of your rights in exchange for having taken care of 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 the Insured?

For starters, if your insurance policy stipulated a deductible, your insurer 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 insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its costs by boosting your premiums and call it a day. On the other hand, if it has a proficient legal team and goes after those cases enthusiastically, 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 one-half at fault), you'll typically get half your deductible back, depending on your state laws.

Moreover, if the total price 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 auto accident attorney Rosedale MD, 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 comparing the reputations of competing companies to determine if they pursue winnable subrogation claims; if they resolve those claims with some expediency; if they keep their customers advised as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, on the other hand, an insurance firm has a reputation of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, you should keep looking.