Subrogation is an idea that's understood among insurance and legal professionals but rarely by the customers who employ them. Even if it sounds complicated, it is to your advantage to understand the steps of how it works. The more knowledgeable you are, the better decisions you can make with regard to your insurance policy.

An insurance policy you have is a commitment that, if something bad occurs, the firm that insures the policy will make restitutions in a timely fashion. If your vehicle is hit, insurance adjusters (and the courts, when necessary) decide who was at fault and that person's insurance covers the damages.

But since figuring out who is financially responsible for services or repairs is often a time-consuming affair a€" and delay sometimes increases the damage to the policyholder a€" insurance firms often opt to pay up front and figure out the blame after the fact. They then need a path to recoup the costs if, ultimately, they weren't responsible for the payout.

Let's Look at an Example

You arrive at the hospital with a deeply cut finger. You give the receptionist your medical insurance card and he records your coverage details. You get stitches and your insurer gets an invoice for the expenses. But on the following day, when you arrive at your place of employment a€" where the injury occurred a€" you are given workers compensation paperwork to fill out. Your company's workers comp policy is in fact responsible for the bill, not your medical insurance policy. The latter has a right to recover its money somehow.

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 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 considered to have some of your rights for having taken care of 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 you have 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 a€" 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 expenses by boosting your premiums. On the other hand, if it has a capable legal team and pursues them efficiently, it is acting both in its own interests and in yours. 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 one-half responsible), you'll typically get half your deductible back, depending on your state laws.

Moreover, if the total cost 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 Divorce attorney utah county, successfully press a subrogation case, it will recover your expenses as well as its own.

All insurers are not the same. When shopping around, it's worth researching the reputations of competing agencies to find out if they pursue winnable subrogation claims; if they do so with some expediency; if they keep their clients apprised as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your money 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 protecting its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.