Subrogation and How It Affects Policyholders

Subrogation is a term that's understood among insurance and legal firms but sometimes not by the policyholders they represent. Rather than leave it to the professionals, it is in your benefit to understand the steps of the process. The more knowledgeable you are about it, the more likely an insurance lawsuit will work out in your favor.

An insurance policy you hold is a commitment that, if something bad happens to you, the business that insures the policy will make restitutions in a timely fashion. If you get an injury at work, your company's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.

But since figuring out who is financially responsible for services or repairs is usually a confusing affair – and delay often compounds the damage to the victim – insurance firms often opt to pay up front and figure out the blame after the fact. They then need a mechanism to recover the costs if, when all the facts are laid out, they weren't actually responsible for the payout.

Let's Look at an 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 and file a repair claim. Later it's determined that the other driver was to blame and her insurance should have paid for the repair of your vehicle. How does your company get its funds back?

How Subrogation Works

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 insurance firms 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 to your self or property. But under subrogation law, your insurance company 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 Does This Matter to Me?

For one thing, if your insurance policy stipulated a deductible, your insurance company wasn't the only one 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 insurance company is timid on any subrogation case it might not win, it might choose to recoup its expenses by boosting your premiums. On the other hand, if it has a proficient legal team and goes after those cases efficiently, it is doing you a favor as well as itself. 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 one-half culpable), you'll typically get $500 back, based on the laws in most states.

Additionally, 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 workers comp lawyer Lithia Springs GA, successfully press a subrogation case, it will recover your losses in addition to its own.

All insurers are not created equal. When comparing, it's worth scrutinizing the records of competing agencies to determine if they pursue legitimate subrogation claims; if they resolve those claims with some expediency; if they keep their policyholders advised as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your funding 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 covering its profitability by raising your premiums, you'll feel the sting later.