Subrogation and How It Affects Your Insurance

Subrogation is a term that's well-known among legal and insurance professionals but often not by the people they represent. Rather than leave it to the professionals, it would be in your benefit to comprehend the steps of the process. The more you know about it, the better decisions you can make with regard to your insurance company.

Every insurance policy you have is an assurance that, if something bad occurs, the firm that insures the policy will make restitutions without unreasonable delay. If your house is robbed, your property insurance agrees to pay you or enable the repairs, subject to state property damage laws.

But since determining who is financially responsible for services or repairs is sometimes a confusing affair – and delay in some cases increases the damage to the policyholder – insurance companies usually decide to pay up front and figure out the blame after the fact. They then need a way to regain the costs if, when all the facts are laid out, they weren't actually in charge of the expense.

Let's Look at an Example

You head to the emergency room with a sliced-open finger. You give the nurse your medical insurance card and she records your policy information. You get stitches and your insurance company gets an invoice for the tab. But the next afternoon, when you clock in at your place of employment – where the accident occurred – you are given workers compensation forms to file. Your workers comp policy is in fact responsible for the bill, not your medical insurance. It has a vested interest in getting that money back in some way.

How Does Subrogation Work?

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. Under ordinary circumstances, only you can sue for damages 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.

How Does This Affect Me?

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 have a stake in the outcome as well – to the tune of $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its expenses by upping your premiums. On the other hand, if it has a knowledgeable legal team and pursues those cases efficiently, it is doing you a favor as well as itself. If all of the money is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get $500 back, based on the laws in most states.

Additionally, if the total expense of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as attorneys for disability claims paddock lake wi, pursue subrogation and succeeds, it will recover your losses in addition to its own.

All insurance agencies are not the same. When comparing, it's worth weighing the reputations of competing agencies to find out if they pursue winnable subrogation claims; if they do so in a reasonable amount of time; if they keep their accountholders informed as the case goes on; 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, instead, an insurance firm has a reputation of honoring claims that aren't its responsibility and then covering its income by raising your premiums, you'll feel the sting later.

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