Subrogation and How It Affects You

Subrogation is an idea that's well-known among legal and insurance companies but rarely by the customers who hire them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your benefit to comprehend the nuances of how it works. The more you know about it, the more likely it is that an insurance lawsuit will work out favorably.

Every insurance policy you own is a promise that, if something bad occurs, the insurer of the policy will make restitutions in one way or another in a timely manner. If your vehicle is rear-ended, insurance adjusters (and the courts, when necessary) determine who was to blame and that person's insurance covers the damages.

But since determining who is financially responsible for services or repairs is sometimes a tedious, lengthy affair – and time spent waiting in some cases increases the damage to the victim – insurance companies often opt to pay up front and assign blame afterward. They then need a mechanism to get back the costs if, once the situation is fully assessed, they weren't actually in charge of the payout.

Can You Give an Example?

Your garage catches fire and causes $10,000 in house damages. Happily, you have property insurance and it pays for the repairs. However, the insurance investigator discovers that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him to blame for the loss. You already have your money, but your insurance agency is out all that money. What does the agency do next?

How Subrogation Works

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. Usually, 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 originally due to you, because it has covered the amount already.

Why Does This Matter to Me?

For a start, 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 be precise, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its expenses by boosting your premiums. On the other hand, if it has a proficient legal team and pursues them enthusiastically, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get half your deductible back, based on the laws in most states.

In addition, if the total loss of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as personal injury law firm Bonney Lake WA, pursue subrogation and succeeds, it will recover your expenses in addition to its own.

All insurers are not the same. When comparing, it's worth researching the reputations of competing companies to evaluate if they pursue legitimate subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their policyholders advised 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, on the other hand, an insurance company has a reputation of paying out claims that aren't its responsibility and then covering its profitability by raising your premiums, you'll feel the sting later.