Subrogation is a term that's well-known in legal and insurance circles but often not by the policyholders they represent. Rather than leave it to the professionals, it would be to your advantage to comprehend an overview of how it works. The more knowledgeable you are about it, the more likely it is that an insurance lawsuit will work out in your favor.

Any insurance policy you have is a commitment that, if something bad happens to you, the business that insures the policy will make restitutions in one way or another in a timely manner. If you get hurt on the job, for example, your company's workers compensation agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.

But since ascertaining who is financially accountable for services or repairs is regularly a confusing affair – and time spent waiting often increases the damage to the policyholder – insurance firms often opt to pay up front and assign blame afterward. They then need a mechanism to regain the costs if, ultimately, they weren't responsible for the payout.

For Example

Your bedroom catches fire and causes $10,000 in house damages. Fortunately, you have property insurance and it takes care of the repair expenses. However, the insurance investigator finds out that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him responsible for the loss. The house has already been fixed up in the name of expediency, but your insurance agency is out $10,000. 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 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 done to your self 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 that was originally due to you, because it has covered the amount already.

How Does This Affect Policyholders?

For one thing, if you have 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 lost some money too – to the tune of $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its losses by increasing 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 acting both in its own interests and in yours. If all of the money is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found one-half culpable), you'll typically get half your deductible back, based on the laws in most states.

Moreover, if the total expense of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as child custody lawyer boulder city Nv, successfully press a subrogation case, it will recover your losses as well as its own.

All insurance companies are not created equal. When comparing, it's worth contrasting the reputations of competing firms to evaluate whether they pursue winnable subrogation claims; if they do so fast; if they keep their clients apprised as the case continues; 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 record of honoring claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.