Subrogation is a concept that's well-known among legal and insurance companies but sometimes not by the policyholders who hire them. Even if it sounds complicated, it is in your benefit to know the nuances of how it works. The more you know, the better decisions you can make about your insurance company.
Every insurance policy you own is a commitment that, if something bad happens to you, the firm on the other end of the policy will make restitutions in one way or another without unreasonable delay. If you get hurt while you're on the clock, for example, your company's workers compensation insurance picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially responsible for services or repairs is typically a time-consuming affair – and time spent waiting often increases the damage to the policyholder – insurance companies often opt to pay up front and assign blame after the fact. They then need a way to recover the costs if, in the end, they weren't actually responsible for the payout.
Can You Give an Example?
Your bedroom catches fire and causes $10,000 in house damages. Happily, you have property insurance and it pays for the repairs. However, in its investigation it finds out that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him to blame for the damages. The house has already been repaired in the name of expediency, but your insurance agency is out ten grand. What does the agency do next?
How Does Subrogation Work?
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. Under ordinary circumstances, only you can sue for damages 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 originally due to you, because it has covered the amount already.
Why Does This Matter to Me?
For one thing, 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 timid on any subrogation case it might not win, it might choose to get back its losses by upping your premiums. On the other hand, if it has a competent legal team and pursues them efficiently, it is acting both in its own interests and in yours. If all $10,000 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 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 may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as criminal law Hillsboro OR, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurers are not created equal. When shopping around, it's worth contrasting the records of competing agencies to find out whether they pursue valid subrogation claims; if they do so quickly; 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 insurance firm has a record of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, you'll feel the sting later.