Subrogation is a term that's well-known in legal and insurance circles but often not by the customers they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your benefit to know an overview of how it works. The more information you have, the more likely it is that an insurance lawsuit will work out favorably.

An insurance policy you have is a commitment that, if something bad happens to you, the business on the other end of the policy will make good in one way or another in a timely fashion. If you get an injury while working, your employer's workers compensation insurance picks up the tab 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 sometimes a tedious, lengthy affair – and time spent waiting in some cases compounds the damage to the policyholder – insurance firms usually decide to pay up front and assign blame after the fact. They then need a mechanism to recover the costs if, when all is said and done, they weren't in charge of the expense.

Let's Look at an Example

You arrive at the Instacare with a deeply cut finger. You give the nurse your medical insurance card and he writes down your policy details. You get stitched up and your insurer gets an invoice for the tab. But on the following morning, when you arrive at your place of employment – where the accident happened – your boss hands you workers compensation paperwork to fill out. Your company's workers comp policy is in fact responsible for the expenses, not your medical insurance. It has a vested interest in getting that money back somehow.

How Does Subrogation Work?

This is where subrogation comes in. It is the process that an insurance company uses to claim payment after it has paid for something that should have been paid by some other entity. Some companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Ordinarily, only you can sue for damages done to your self 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.

Why Should I Care?

For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to get back its costs by increasing your premiums. On the other hand, if it knows which cases it is owed and goes after those cases enthusiastically, 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 50 percent accountable), you'll typically get $500 back, depending on your state laws.

In addition, if the total price 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 personal injury attorney glen burnie md, pursue subrogation and wins, it will recover your losses as well as its own.

All insurers are not the same. When comparing, it's worth scrutinizing the reputations of competing firms to evaluate whether they pursue valid subrogation claims; if they resolve those claims without delay; if they keep their policyholders updated as the case goes on; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then covering its profitability by raising your premiums, you should keep looking.

Subrogation is a concept that's well-known in legal and insurance circles but sometimes not by the people they represent. Even if it sounds complicated, it is to your advantage to comprehend the steps of the process. The more information you have, the better decisions you can make with regard to your insurance company.

Any insurance policy you have is a commitment that, if something bad occurs, the firm on the other end of the policy will make restitutions in a timely fashion. If a windstorm damages your real estate, your property insurance steps in to compensate you or facilitate the repairs, subject to state property damage laws.

But since ascertaining who is financially accountable for services or repairs is usually a tedious, lengthy affair – and delay sometimes increases the damage to the victim – insurance companies often opt to pay up front and figure out the blame later. They then need a method to get back the costs if, when there is time to look at all the facts, they weren't actually in charge of the payout.

For Example

You are in a car accident. Another car crashed into yours. The police show up to assess the situation, you exchange insurance information, 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 at fault and her insurance policy should have paid for the repair of your auto. How does your insurance 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 companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Ordinarily, only you can sue for damages done to your self or property. But under subrogation law, your insurer is given some of your rights in exchange for making good on 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 Me?

For a start, if your insurance policy stipulated a deductible, your insurer 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 – namely, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its costs by boosting your premiums. On the other hand, if it knows which cases it is owed and goes after them enthusiastically, it is acting both in its own interests and in yours. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent accountable), you'll typically get $500 back, depending on your state laws.

Moreover, if the total loss of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as workers comp attorney Austell GA, pursue subrogation and wins, it will recover your losses as well as its own.

All insurers are not created equal. When comparing, it's worth researching the reputations of competing agencies to evaluate if they pursue winnable subrogation claims; if they resolve those claims fast; if they keep their clients informed as the case goes on; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, on the other hand, an insurance agency has a reputation of honoring claims that aren't its responsibility and then covering its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.

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