- 8 29, 2018
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Subrogation is an idea that's understood among insurance and legal companies but sometimes not by the people they represent. Rather than leave it to the professionals, it would be in your benefit to know an overview of the process. The more information you have, the better decisions you can make with regard to your insurance company.
Every insurance policy you own is an assurance that, if something bad occurs, the business that insures the policy will make restitutions in one way or another without unreasonable delay. If you get an injury on the job, your employer'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 regularly a heavily involved affair – and delay in some cases compounds the damage to the policyholder – insurance firms often decide to pay up front and figure out the blame after the fact. They then need a method to get back the costs if, once the situation is fully assessed, they weren't responsible for the payout.
Can You Give an Example?
You are in an auto 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 and file a repair claim. Later police tell the insurance companies that the other driver was to blame and her insurance should have paid for the repair of your vehicle. How does your company get its money back?
How Does Subrogation Work?
This is where subrogation comes in. It is the method that an insurance company uses to claim payment 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 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.
Why Do I Need to Know This?
For starters, if your insurance policy stipulated a deductible, your insurer wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – namely, $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to recoup its expenses by increasing your premiums. On the other hand, if it has a capable legal team and goes after those cases enthusiastically, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half culpable), you'll typically get $500 back, depending on your state laws.
Furthermore, if the total loss of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as personal injury attorney reisterstown md, pursue subrogation and succeeds, it will recover your expenses as well as its own.
All insurers are not the same. When comparing, it's worth looking at the reputations of competing agencies to evaluate whether they pursue legitimate subrogation claims; if they do so with some expediency; if they keep their accountholders posted as the case continues; 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 record of paying out claims that aren't its responsibility and then protecting its profit margin by raising your premiums, you should keep looking.