The Things Every Insurance Policy holder Ought to Know About Subrogation

Subrogation is a term that's well-known in legal and insurance circles but sometimes not by the policyholders who hire them. Even if it sounds complicated, it would be to your advantage to comprehend the steps of the process. The more you know about it, the better decisions you can make with regard to your insurance policy.

An insurance policy you hold is a commitment that, if something bad occurs, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If your home is broken into, for instance, your property insurance agrees to repay you or facilitate the repairs, subject to state property damage laws.

But since determining who is financially accountable for services or repairs is regularly a heavily involved affair – and time spent waiting in some cases increases the damage to the policyholder – insurance firms in many cases decide to pay up front and figure out the blame later. They then need a means to get back the costs if, when there is time to look at all the facts, they weren't actually responsible for the expense.

Let's Look at an Example

You are in a traffic-light 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 entirely at fault and her insurance 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 method 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. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurer 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 Do I Need to Know This?

For a start, if your insurance policy stipulated a deductible, your insurer 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 insurance company is lax about bringing subrogation cases to court, it might choose to recoup its expenses by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them aggressively, it is doing you a favor as well as itself. 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 one-half responsible), you'll typically get half your deductible 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 child custody law firm boulder city Nv, pursue subrogation and wins, it will recover your costs as well as its own.

All insurance agencies are not the same. When comparing, it's worth looking at the reputations of competing companies to find out if they pursue valid subrogation claims; if they resolve those claims without delay; if they keep their policyholders posted as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, instead, an insurance agency 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.