One That Knows

Subrogation is an idea that's well-known in insurance and legal circles but often not by the policyholders they represent. Rather than leave it to the professionals, it would be in your self-interest to understand the steps of the process. The more you know, the better decisions you can make with regard to your insurance company.

An insurance policy you hold is a commitment that, if something bad occurs, the firm on the other end of the policy will make good in one way or another without unreasonable delay. If you get injured on the job, your company's workers compensation agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.

But since determining who is financially responsible for services or repairs is typically a heavily involved affair – and delay often compounds the damage to the victim – insurance firms usually opt to pay up front and assign blame later. They then need a mechanism to recover the costs if, ultimately, they weren't actually in charge of the expense.

Can You Give an Example?

You are in a car accident. Another car collided with yours. Police are called, you exchange insurance information, and you go on your way. You have comprehensive insurance and file a repair claim. Later it's determined that the other driver was to blame and his insurance should have paid for the repair of your vehicle. How does your insurance company get its money back?

How Does Subrogation Work?

This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement 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 insurance company is extended some of your rights 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 Individuals?

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 – to be precise, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its losses by boosting 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 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 culpable), you'll typically get half your deductible back, based on the laws in most states.

Moreover, if the total price of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as Personal injury attorney Lithia Springs, GA, pursue subrogation and succeeds, it will recover your losses in addition to its own.

All insurers are not the same. When comparing, it's worth contrasting the reputations of competing companies to find out whether they pursue legitimate subrogation claims; if they resolve those claims quickly; if they keep their customers informed as the case continues; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, on the other hand, an insurer has a reputation of paying out claims that aren't its responsibility and then covering its profit margin by raising your premiums, you should keep looking.