- 8 15, 2018
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Subrogation is a concept that's understood among legal and insurance companies but rarely by the policyholders they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your self-interest to comprehend an overview of how it works. The more knowledgeable you are, the better decisions you can make with regard to your insurance policy.
An insurance policy you own 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 your vehicle is hit, insurance adjusters (and the courts, when necessary) determine who was to blame and that person's insurance pays out.
But since determining who is financially accountable for services or repairs is typically a tedious, lengthy affair – and delay in some cases increases the damage to the policyholder – insurance firms in many cases opt to pay up front and assign blame after the fact. They then need a way to get back the costs if, when there is time to look at all the facts, they weren't responsible for the payout.
You are in a car accident. Another car collided with yours. The police show up to assess the situation, you exchange insurance details, 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 funds back?
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. Normally, only you can sue for damages to your person or property. But under subrogation law, your insurer is considered to have 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.
How Does This Affect Policyholders?
For starters, if your insurance policy stipulated a deductible, it wasn't just your insurer who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to the tune of $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recoup its expenses by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them efficiently, it is doing you a favor as well as itself. 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 50 percent at fault), you'll typically get half your deductible back, depending on your state laws.
Furthermore, 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 adoption lawyer delavan wi, pursue subrogation and wins, it will recover your costs in addition to its own.
All insurance agencies are not the same. When shopping around, it's worth contrasting the reputations of competing companies to find out whether they pursue winnable subrogation claims; if they do so in a reasonable amount of time; if they keep their policyholders advised as the case continues; and if they then process successfully won reimbursements immediately so that you can get your money 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 bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.