Subrogation is an idea that's understood among legal and insurance professionals but often not by the customers who hire them. Rather than leave it to the professionals, it would be in your self-interest to know the steps of the process. The more information you have, the better decisions you can make with regard to your insurance company.
Every insurance policy you own is a promise that, if something bad happens to you, the company that covers the policy will make restitutions in one way or another in a timely fashion. If you get injured at work, for example, your employer's workers compensation pays out 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 usually a time-consuming affair – and delay in some cases compounds the damage to the policyholder – insurance companies usually decide to pay up front and assign blame after the fact. They then need a way to regain the costs if, ultimately, they weren't in charge of the expense.
Let's Look at an Example
You are in a highway accident. Another car crashed into yours. The police show up to assess the situation, you exchange insurance information, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later it's determined that the other driver was at fault and her insurance should have paid for the repair of your vehicle. How does your company get its money back?
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. Ordinarily, only you can sue for damages to your person or property. But under subrogation law, your insurer is extended some of your rights 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 Policyholders?
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 – to be precise, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its expenses by increasing your premiums. On the other hand, if it has a capable 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 at fault), you'll typically get $500 back, depending on the laws in your state.
Furthermore, if the total cost 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 criminal attorney Portland, OR, pursue subrogation and wins, it will recover your costs as well as its own.
All insurance agencies are not the same. When shopping around, it's worth researching the reputations of competing companies to find out whether they pursue valid subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their accountholders apprised as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then covering its income by raising your premiums, you'll feel the sting later.