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Subrogation is an idea that's well-known in insurance and legal circles but often not by the people they represent. Even if you've never heard the word before, it would be to your advantage to understand the nuances of how it works. The more knowledgeable you are, the better decisions you can make about your insurance company.

Any insurance policy you own is an assurance that, if something bad happens to you, the insurer of the policy will make good without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and police, when necessary) determine who was at fault and that party's insurance covers the damages.

But since figuring out who is financially accountable for services or repairs is usually a confusing affair – and time spent waiting often compounds the damage to the policyholder – insurance firms usually opt to pay up front and assign blame after the fact. They then need a means to recoup the costs if, when all the facts are laid out, they weren't in charge of the expense.

Can You Give an Example?

Your kitchen catches fire and causes $10,000 in home damages. Happily, you have property insurance and it pays out your claim in full. However, the insurance investigator finds out that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him responsible for the damages. You already have your money, but your insurance agency is out all that money. What does the agency do next?

How Subrogation Works

This is where subrogation comes in. It is the method 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 to your person or property. But under subrogation law, your insurer is given some of your rights in exchange for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.

Why Should I Care?

For a start, if your insurance policy stipulated a deductible, your insurer wasn't the only one who 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 recover its costs by increasing your premiums and call it a day. On the other hand, if it has a capable legal team and pursues those cases efficiently, it is acting both in its own interests and in yours. If all ten grand is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent responsible), 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 law defense lawyer Hillsboro OR, pursue subrogation and succeeds, it will recover your expenses as well as its own.

All insurers are not created equal. When comparing, it's worth scrutinizing the records of competing companies to determine whether they pursue legitimate subrogation claims; if they resolve those claims fast; if they keep their customers advised as the case goes on; 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 firm has a reputation 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.

Subrogation is an idea that's understood among legal and insurance professionals but sometimes not by the customers they represent. Even if you've never heard the word before, it would be in your benefit to comprehend the nuances of how it works. The more information you have, the more likely relevant proceedings will work out favorably.

Every insurance policy you own is a commitment that, if something bad occurs, the firm on the other end of the policy will make good in a timely fashion. If you get injured while working, your company'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 typically a confusing affair – and time spent waiting in some cases adds to the damage to the policyholder – insurance companies usually decide to pay up front and figure out the blame afterward. They then need a way to regain the costs if, when all is said and done, they weren't actually responsible for the expense.

For Example

Your stove catches fire and causes $10,000 in home damages. Fortunately, you have property insurance and it takes care of the repair expenses. However, the assessor assigned to your case discovers that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him responsible for the damages. You already have your money, but your insurance company is out $10,000. What does the company do next?

How Subrogation Works

This is where subrogation comes in. It is the method 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. Usually, only you can sue for damages done to your person or property. But under subrogation law, your insurer is considered to have some of your rights in exchange for having taken care of 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, 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 – to the tune of $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its losses by upping your premiums. On the other hand, if it knows which cases it is owed and goes after those cases aggressively, it is acting both in its own interests and in yours. If all ten grand is recovered, you will get your full $1,000 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 the laws in your state.

Moreover, 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 attorney Hillsboro OR, successfully press a subrogation case, it will recover your expenses as well as its own.

All insurance agencies are not the same. When shopping around, it's worth looking at the reputations of competing companies to evaluate if they pursue valid subrogation claims; if they do so fast; if they keep their clients informed 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 insurer has a record of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, even attractive rates won't outweigh the eventual headache.

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