Creamy Synonyms

Subrogation is a concept that's understood in legal and insurance circles but often not by the customers who employ them. Rather than leave it to the professionals, it is in your benefit to understand the nuances of how it works. The more you know, the better decisions you can make about your insurance policy.

Any insurance policy you hold is an assurance that, if something bad occurs, the firm that insures the policy will make good in one way or another in a timely manner. If your home is broken into, your property insurance steps in to remunerate you or facilitate the repairs, subject to state property damage laws.

But since figuring out who is financially responsible for services or repairs is often a time-consuming affair – and time spent waiting often adds to the damage to the victim – insurance firms usually decide to pay up front and figure out the blame after the fact. They then need a method to regain the costs if, in the end, they weren't in charge of the expense.

Can You Give an Example?

You are in a car accident. Another car ran into yours. Police are called, 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 her insurance should have paid for the repair of your auto. How does your insurance company get its funds back?

How Does Subrogation Work?

This is where subrogation comes in. It is the way 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. Usually, only you can sue for damages to your person or property. But under subrogation law, your insurance company is given some of your rights for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.

How Does This Affect Individuals?

For starters, if your insurance policy stipulated a deductible, it wasn't just your insurance company 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 unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its losses by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them aggressively, it is acting both in its own interests and in yours. If all is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half responsible), you'll typically get half your deductible back, based on the laws in most states.

In addition, if the total expense of an accident is more than 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 attorney Lithia Springs, GA, pursue subrogation and succeeds, it will recover your expenses in addition to its own.

All insurers are not the same. When comparing, it's worth weighing the records of competing companies to determine whether they pursue winnable subrogation claims; if they do so without delay; if they keep their customers posted as the case continues; and if they then process successfully won reimbursements immediately 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 safeguarding its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.