Subrogation and How It Affects Your Insurance Policy

Subrogation is a concept that's understood in legal and insurance circles but rarely by the customers who hire them. Rather than leave it to the professionals, it would be to your advantage to comprehend an overview of the process. The more information you have, the more likely an insurance lawsuit will work out favorably.

Every insurance policy you own is an assurance that, if something bad happens to you, the insurer of the policy will make good without unreasonable delay. If you get hurt while working, for example, 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 typically a heavily involved affair – and delay often increases the damage to the victim – insurance companies often decide to pay up front and figure out the blame afterward. They then need a means to recoup the costs if, when all is said and done, they weren't in charge of the payout.

Can You Give an Example?

Your bedroom catches fire and causes $10,000 in home damages. Luckily, you have property insurance and it pays for the repairs. However, the assessor assigned to your case discovers that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him to blame for the loss. The home has already been fixed up in the name of expediency, but your insurance agency is out ten grand. What does the agency do next?

How Does Subrogation Work?

This is where subrogation comes in. It is the way 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. Under ordinary circumstances, 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 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 a start, if you have 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 have a stake in the outcome as well – to be precise, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its costs by ballooning your premiums. On the other hand, if it has a capable legal team and pursues them enthusiastically, it is acting both in its own interests and in yours. If all ten grand 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 your state laws.

Furthermore, if the total cost 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 lawyer Middle River MD, pursue subrogation and wins, it will recover your expenses in addition to its own.

All insurers are not the same. When shopping around, it's worth examining the records of competing agencies to find out whether they pursue legitimate subrogation claims; if they do so in a reasonable amount of time; if they keep their accountholders informed as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your losses 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 safeguarding its income by raising your premiums, you should keep looking.