Subrogation is an idea that's well-known in legal and insurance circles but often not by the people they represent. Rather than leave it to the professionals, it is in your benefit to understand the steps of the process. The more you know, the better decisions you can make with regard to your insurance company.
An insurance policy you own is an assurance that, if something bad happens to you, the business on the other end of the policy will make good in one way or another without unreasonable delay. If you get hurt at work, your employer's workers compensation pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially accountable for services or repairs is typically a confusing affair – and time spent waiting often compounds the damage to the victim – insurance companies usually decide to pay up front and figure out the blame afterward. They then need a means to recoup the costs if, when all the facts are laid out, they weren't responsible for the expense.
Let's Look at an Example
You are in a car accident. Another car ran into yours. The police show up to assess the situation, 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 his insurance should have paid for the repair of your vehicle. How does your company get its funds back?
How Does Subrogation Work?
This is where subrogation comes in. It is the process 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. Under ordinary circumstances, 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 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 the Insured?
For a start, if you have a deductible, it wasn't just your insurer that 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 lax about bringing subrogation cases to court, it might opt to recoup its losses by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases enthusiastically, it is acting both in its own interests and in yours. If all of the money 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 at fault), you'll typically get half your deductible back, based on the laws in most states.
Additionally, if the total cost 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 defense lawyer Hillsboro OR, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurers are not the same. When comparing, it's worth comparing the reputations of competing companies to evaluate if they pursue valid subrogation claims; if they do so with some expediency; if they keep their customers apprised as the case continues; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, instead, an insurer has a record of honoring claims that aren't its responsibility and then safeguarding its income by raising your premiums, you should keep looking.