Subrogation is a term that's well-known in legal and insurance circles but rarely by the customers who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be to your advantage to understand an overview of the process. The more you know, the better decisions you can make about your insurance policy.

Any insurance policy you own is a promise that, if something bad occurs, the company that insures the policy will make good in a timely fashion. If your property suffers fire damage, your property insurance steps in to compensate you or enable the repairs, subject to state property damage laws.

But since determining who is financially responsible for services or repairs is often a confusing affair – and time spent waiting in some cases compounds the damage to the policyholder – insurance firms in many cases decide to pay up front and figure out the blame after the fact. They then need a mechanism to get back the costs if, when there is time to look at all the facts, they weren't actually in charge of the expense.

For Example

Your electric outlet catches fire and causes $10,000 in home damages. Luckily, 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 liable for the loss. You already have your money, but your insurance company is out $10,000. What does the company do next?

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. Ordinarily, only you can sue for damages to your self or property. But under subrogation law, your insurer is given some of your rights in exchange for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.

Why Does This Matter to Me?

For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurer that 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 lax about bringing subrogation cases to court, it might choose to recoup its losses by upping your premiums. 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 ten grand 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 $500 back, based on the laws in most states.

Moreover, if the total expense of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as personal injury legal assistance Puyallup WA, successfully press a subrogation case, it will recover your costs as well as its own.

All insurers are not the same. When shopping around, it's worth scrutinizing the reputations of competing agencies to find out whether they pursue winnable subrogation claims; if they resolve those claims quickly; if they keep their clients updated as the case continues; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, instead, an insurance firm 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.

Subrogation is an idea that's well-known in legal and insurance circles but often not by the people they represent. Rather than leave it to the professionals, it is in your self-interest to understand the nuances of how it works. The more you know about it, the better decisions you can make with regard to your insurance policy.

An insurance policy you own is an assurance that, if something bad occurs, the company that covers the policy will make good in one way or another without unreasonable delay. If you get injured while you're on the clock, 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 sometimes a time-consuming affair – and time spent waiting often increases the damage to the policyholder – insurance firms in many cases decide to pay up front and figure out the blame after the fact. They then need a method to get back the costs if, when there is time to look at all the facts, they weren't actually responsible for the payout.

Can You Give an Example?

Your stove catches fire and causes $10,000 in house damages. Fortunately, you have property insurance and it pays out your claim in full. However, in its investigation it finds out 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 agency is out ten grand. What does the agency do next?

How Subrogation Works

This is where subrogation comes in. It is the way 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. Ordinarily, 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 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 Individuals?

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 – to be precise, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to recover its losses by upping your premiums. On the other hand, if it knows which cases it is owed and pursues those cases aggressively, 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 responsible), you'll typically get $500 back, depending on your state laws.

In addition, if the total expense of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as auto accident attorney Middle River MD, successfully press a subrogation case, it will recover your losses in addition to its own.

All insurance companies are not created equal. When comparing, it's worth looking at the records of competing agencies to find out if they pursue winnable subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their customers advised 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 insurance agency has a record 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.

Subrogation is a term that's understood among insurance and legal companies but sometimes not by the customers they represent. Even if it sounds complicated, it is to your advantage to understand the nuances of the process. The more knowledgeable you are about it, the better decisions you can make about your insurance company.

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

But since determining who is financially responsible for services or repairs is typically a heavily involved affair – and delay often increases the damage to the policyholder – insurance firms often decide to pay up front and assign blame after the fact. They then need a means to recoup the costs if, once the situation is fully assessed, they weren't responsible for the expense.

For Example

Your kitchen catches fire and causes $10,000 in home damages. Luckily, you have property insurance and it pays for the repairs. 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 responsible for the damages. The house has already been repaired in the name of expediency, but your insurance company is out all that money. What does the company do next?

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. Under ordinary circumstances, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is extended 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 the Insured?

For one thing, if you have a deductible, it wasn't just your insurance company that 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 insurer is lax about bringing subrogation cases to court, it might choose to get back its losses by upping your premiums and call it a day. On the other hand, if it has a capable legal team and pursues them enthusiastically, it is acting both in its own interests and in yours. If all ten grand is recovered, you will get your full 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, based on the laws in most states.

Furthermore, if the total price 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 help boulder city Nv, pursue subrogation and succeeds, it will recover your costs in addition to its own.

All insurers are not created equal. When shopping around, it's worth weighing the records of competing agencies to determine whether they pursue legitimate subrogation claims; if they resolve those claims quickly; if they keep their policyholders updated as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then covering its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.

^