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What You Need to Know About Subrogation

Subrogation is a term that's understood in insurance and legal circles but rarely by the policyholders who employ them. Rather than leave it to the professionals, it is in your benefit to comprehend an overview of how it works. The more information you have about it, the more likely relevant proceedings will work out favorably.

An insurance policy you own is a commitment that, if something bad happens to you, the insurer of the policy will make restitutions in one way or another in a timely manner. If you get injured at work, your company's workers compensation insurance pays out for medical services. Employment lawyers handle the details; you just get fixed up.

But since ascertaining who is financially responsible for services or repairs is sometimes a tedious, lengthy affair – and delay in some cases increases the damage to the policyholder – insurance firms often opt to pay up front and figure out the blame later. They then need a mechanism to recoup the costs if, once the situation is fully assessed, they weren't in charge of the payout.

For Example

You are in a car accident. Another car collided with yours. The police show up to assess the situation, you exchange insurance information, and you go on your way. You have comprehensive insurance and file a repair claim. Later it's determined that the other driver was entirely to blame and his insurance should have paid for the repair of your auto. How does your company get its money back?

How Does Subrogation Work?

This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement 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 to your self or property. But under subrogation law, your insurer is extended 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.

Why Should I Care?

For starters, if you have 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 – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to get back its costs by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases aggressively, it is acting both in its own interests and in yours. If all of the money 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 at fault), you'll typically get $500 back, depending on the laws in your state.

In addition, if the total cost 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 workmans comp attorney Columbus, ga, pursue subrogation and succeeds, it will recover your costs in addition to its own.

All insurers are not created equal. When comparing, it's worth looking at the reputations of competing firms to evaluate if they pursue winnable subrogation claims; if they do so quickly; if they keep their policyholders advised as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, instead, an insurance firm has a reputation of honoring claims that aren't its responsibility and then covering its income by raising your premiums, even attractive rates won't outweigh the eventual headache.