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Subrogation and How It Affects You

Subrogation is a concept that's understood in insurance and legal circles but rarely by the people who hire them. Even if you've never heard the word before, it is in your self-interest to know the steps of how it works. The more information you have, the more likely it is that relevant proceedings will work out in your favor.

Every insurance policy you own is a promise that, if something bad occurs, the company that covers the policy will make good in one way or another in a timely fashion. If your vehicle is rear-ended, insurance adjusters (and police, when necessary) decide who was at fault and that party's insurance pays out.

But since figuring out who is financially accountable for services or repairs is typically a tedious, lengthy affair – and delay often increases the damage to the policyholder – insurance firms usually opt to pay up front and assign blame later. They then need a means to regain the costs if, once the situation is fully assessed, they weren't responsible for the expense.

Can You Give an Example?

You are in a car accident. Another car crashed into 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 police tell the insurance companies that the other driver was at fault and her insurance should have paid for the repair of your car. How does your insurance company get its money back?

How Subrogation Works

This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. 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 self or property. But under subrogation law, your insurance company 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.

How Does This Affect Individuals?

For a start, if you have 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 lost some money too – to be precise, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its costs by raising your premiums. On the other hand, if it knows which cases it is owed and pursues those cases efficiently, it is acting both in its own interests and in yours. If all $10,000 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 at fault), you'll typically get half your deductible back, depending on your state laws.

In addition, if the total cost of an accident is over 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 legal counsel springville ut, successfully press a subrogation case, it will recover your costs as well as its own.

All insurance agencies are not created equal. When comparing, it's worth contrasting the records of competing firms to evaluate whether they pursue winnable subrogation claims; if they do so quickly; if they keep their accountholders posted as the case continues; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, on the other hand, an insurance firm has a record of honoring claims that aren't its responsibility and then covering its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.