Subrogation is an idea that's well-known among legal and insurance firms but often not by the customers who hire them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your benefit to understand the nuances of the process. The more knowledgeable you are about it, the more likely an insurance lawsuit will work out in your favor.
An insurance policy you have is a commitment that, if something bad occurs, the firm that covers the policy will make good in one way or another in a timely fashion. If you get hurt at work, for instance, your company's workers compensation insurance 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 heavily involved affair – and delay sometimes adds to the damage to the policyholder – insurance firms often decide to pay up front and assign blame after the fact. They then need a means to get back the costs if, in the end, they weren't actually responsible for the expense.
Let's Look at an Example
You are in an auto 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 police tell the insurance companies that the other driver was entirely to blame and her insurance should have paid for the repair of your car. How does your company get its funds back?
How Subrogation Works
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. Usually, only you can sue for damages to your self or property. But under subrogation law, your insurer is extended some of your rights in exchange 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 starters, 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 have a stake in the outcome as well – namely, $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to recover its expenses by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them efficiently, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent culpable), you'll typically get half your deductible back, based on the laws in most states.
Moreover, if the total loss of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as criminal defense attorney Portland OR, successfully press a subrogation case, it will recover your expenses in addition to its own.
All insurance companies are not the same. When comparing, it's worth examining the reputations of competing agencies to determine whether they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their customers apprised as the case continues; and if they then process successfully won reimbursements right away so that you can get your funding 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 profitability by raising your premiums, you should keep looking.