Subrogation is an idea that's well-known in insurance and legal circles but rarely by the people who employ them. Even if it sounds complicated, it would be in your benefit to understand an overview of how it works. The more you know, the better decisions you can make with regard to your insurance policy.
Any insurance policy you hold is a promise that, if something bad happens to you, the insurer of the policy will make good in a timely fashion. If your vehicle is rear-ended, insurance adjusters (and police, when necessary) determine who was at fault and that party's insurance pays out.
But since determining who is financially responsible for services or repairs is often a time-consuming affair – and time spent waiting in some cases increases the damage to the policyholder – insurance companies in many cases opt to pay up front and assign blame later. They then need a method to regain the costs if, when all is said and done, they weren't in charge of the expense.
Your living room catches fire and causes $10,000 in home damages. Luckily, you have property insurance and it takes care of the repair expenses. 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 accountable for the loss. The home has already been fixed up in the name of expediency, but your insurance firm is out ten grand. What does the firm do next?
How Subrogation Works
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 companies 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 done to your self or property. But under subrogation law, your insurer is extended 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 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 – namely, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its expenses by upping your premiums. On the other hand, if it has a competent legal team and goes after them aggressively, it is doing you a favor as well as itself. If all $10,000 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 accountable), you'll typically get $500 back, depending on the laws in your state.
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 criminal lawyer Hillsboro, OR, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurance companies are not created equal. When shopping around, it's worth comparing the reputations of competing firms to evaluate if they pursue winnable subrogation claims; if they resolve those claims with some expediency; if they keep their customers apprised as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, instead, 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, you should keep looking.