Subrogation and How It Affects Policyholders

Subrogation is an idea that's understood among insurance and legal companies but often not by the customers who employ them. Rather than leave it to the professionals, it is in your self-interest to understand the steps of how it works. The more information you have, the more likely relevant proceedings will work out favorably.

Any insurance policy you hold is a promise that, if something bad happens to you, the company on the other end of the policy will make good in one way or another without unreasonable delay. If you get hurt while working, your company's workers compensation insurance agrees to pay 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 heavily involved affair – and time spent waiting sometimes compounds the damage to the policyholder – insurance firms usually decide to pay up front and assign blame later. They then need a path to regain the costs if, when all the facts are laid out, they weren't responsible for the payout.

For Example

You head to the Instacare with a sliced-open finger. You give the receptionist your health insurance card and she records your policy details. You get taken care of and your insurer gets a bill for the medical care. But the next afternoon, when you arrive at your place of employment – where the accident occurred – your boss hands you workers compensation paperwork to file. Your company's workers comp policy is actually responsible for the payout, not your health insurance. It has a vested interest in getting that money back somehow.

How Subrogation Works

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. Normally, only you can sue for damages to your person or property. But under subrogation law, your insurer is extended 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 have a stake in the outcome as well – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to recover its losses by increasing your premiums and call it a day. On the other hand, if it has a competent legal team 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 thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent culpable), you'll typically get $500 back, based on the laws in most states.

In addition, if the total loss 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 serious injury lawyers Glen Burnie MD, pursue subrogation and wins, it will recover your losses in addition to its own.

All insurers are not created equal. When comparing, it's worth looking at the records of competing agencies to evaluate whether they pursue legitimate subrogation claims; if they do so quickly; if they keep their clients posted as the case continues; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, instead, an insurance firm has a record of paying out claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you'll feel the sting later.

This entry was posted in Law

Subrogation and How It Affects Your Insurance

Subrogation is a term that's well-known among legal and insurance firms but sometimes not by the customers they represent. Even if you've never heard the word before, it would be to your advantage to comprehend the steps of how it works. The more you know about it, the better decisions you can make about your insurance policy.

An insurance policy you have is a commitment that, if something bad occurs, the company that covers the policy will make good in one way or another in a timely manner. If your home suffers fire damage, for instance, your property insurance steps in to compensate you or pay for the repairs, subject to state property damage laws.

But since ascertaining who is financially responsible for services or repairs is often a tedious, lengthy affair – and delay sometimes increases the damage to the victim – insurance companies usually opt to pay up front and assign blame after the fact. They then need a path to get back the costs if, once the situation is fully assessed, they weren't in charge of the payout.

Can You Give an Example?

Your garage catches fire and causes $10,000 in home damages. Happily, you have property insurance and it takes care of the repair expenses. However, the insurance investigator discovers that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him responsible for the loss. You already have your money, but your insurance agency is out $10,000. What does the agency 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 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 for having taken care of the damages. It can go after the money 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 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 losses by upping your premiums. On the other hand, if it has a knowledgeable legal team 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 to blame), you'll typically get half your deductible back, depending on the laws in your state.

Furthermore, 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 Catastrophic injury attorneys Glen Burnie MD, pursue subrogation and wins, it will recover your costs in addition to its own.

All insurance agencies are not the same. When shopping around, it's worth looking at the records of competing agencies to find out if they pursue valid subrogation claims; if they resolve those claims with some expediency; if they keep their customers apprised as the case continues; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, on the other hand, an insurer has a record of honoring claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you should keep looking.

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Preparing Your Finances

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