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The Things You Need to Know About Subrogation

Subrogation is a term that's well-known among legal and insurance companies but sometimes not by the policyholders who hire them. Even if you've never heard the word before, it is in your benefit to understand an overview of how it works. The more information you have, the better decisions you can make with regard to your insurance company.

Every insurance policy you have is a promise that, if something bad happens to you, the company that insures the policy will make restitutions without unreasonable delay. If your vehicle is hit, insurance adjusters (and the judicial system, when necessary) decide who was to blame and that person's insurance pays out.

But since ascertaining who is financially responsible for services or repairs is usually a confusing affair – and time spent waiting in some cases compounds the damage to the victim – insurance companies in many cases decide to pay up front and figure out the blame afterward. They then need a mechanism to recoup the costs if, ultimately, they weren't in charge of the expense.

Let's Look at an Example

Your garage catches fire and causes $10,000 in house damages. Happily, you have property insurance and it pays out your claim in full. However, in its investigation it discovers that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him to blame for the damages. You already have your money, but your insurance firm is out ten grand. What does the firm do next?

How Does Subrogation Work?

This is where subrogation comes in. It is the method 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 insurer is considered to have 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 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 lost some money too – to be precise, $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to recover its expenses by raising your premiums. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is doing you a favor as well as itself. If all of the money is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent accountable), you'll typically get half your deductible back, based on the laws in most states.

In addition, if the total price of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as criminal law Portland, OR, pursue subrogation and succeeds, it will recover your losses as well as its own.

All insurers are not created equal. When shopping around, it's worth looking up the reputations of competing companies to find out if they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their customers posted 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, on the other hand, an insurer has a reputation of honoring claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.

The Things You Need to Know About Subrogation

Subrogation is a concept that's well-known in legal and insurance circles but sometimes not by the customers they represent. Even if you've never heard the word before, it would be in your benefit to understand the nuances of how it works. The more information you have, the more likely it is that an insurance lawsuit will work out favorably.

Every insurance policy you hold is an assurance that, if something bad occurs, the company on the other end of the policy will make good in one way or another without unreasonable delay. If you get an injury on the job, for example, your company's workers compensation pays out for medical services. Employment lawyers handle the details; you just get fixed up.

But since determining who is financially accountable for services or repairs is typically a confusing affair – and delay sometimes compounds the damage to the victim – insurance firms in many cases opt to pay up front and assign blame afterward. They then need a method to recover the costs if, when all the facts are laid out, they weren't in charge of the expense.

For Example

You head to the hospital with a gouged finger. You hand the receptionist your health insurance card and she records your plan details. You get stitches and your insurance company is billed for the tab. But on the following afternoon, when you clock in at your workplace – where the accident happened – you are given workers compensation paperwork to turn in. Your workers comp policy is actually responsible for the payout, not your health insurance policy. It has a vested interest in getting that money back in some way.

How Does Subrogation Work?

This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement after it has paid for something that should have been paid by some other entity. 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. Usually, 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 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.

How Does This Affect Policyholders?

For a start, if your insurance policy stipulated 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 have a stake in the outcome as well – to be precise, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to get back its costs by boosting your premiums. On the other hand, if it knows which cases it is owed and pursues those cases enthusiastically, it is doing you a favor as well as itself. 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 responsible), you'll typically get $500 back, depending on the laws in your state.

Moreover, if the total cost of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as car accident attorney Austell GA, pursue subrogation and wins, it will recover your losses as well as its own.

All insurers are not the same. When comparing, it's worth looking up the reputations of competing companies to find out whether they pursue winnable subrogation claims; if they resolve those claims without delay; if they keep their clients posted as the case goes on; 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, on the other hand, an insurance company has a record of honoring claims that aren't its responsibility and then protecting its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.

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