Subrogation is an idea that's understood in legal and insurance circles but sometimes not by the people they represent. Even if you've never heard the word before, it is to your advantage to know the steps of how it works. The more you know, the better decisions you can make about your insurance company.
Every insurance policy you hold is a commitment that, if something bad happens to you, the business that covers the policy will make good in one way or another in a timely manner. If your vehicle is rear-ended, insurance adjusters (and the judicial system, when necessary) determine who was at fault and that person's insurance pays out.
But since determining who is financially responsible for services or repairs is regularly a time-consuming affair – and time spent waiting in some cases increases the damage to the policyholder – insurance companies in many cases decide to pay up front and figure out the blame later. They then need a way to get back the costs if, in the end, they weren't in charge of the payout.
Let's Look at an Example
You arrive at the Instacare with a sliced-open finger. You give the nurse your medical insurance card and he records your coverage information. You get stitched up and your insurance company gets a bill for the expenses. But the next afternoon, when you clock in at your workplace – where the accident happened – you are given workers compensation paperwork to file. Your employer's workers comp policy is in fact responsible for the payout, not your medical insurance. The latter has an interest in recovering its costs in some way.
How Subrogation Works
This is where subrogation comes in. It is the way 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 done to your person or property. But under subrogation law, your insurance company is given 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 one thing, if you have a deductible, it wasn't just your insurance company 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 lax about bringing subrogation cases to court, it might opt to recoup its expenses by upping your premiums. On the other hand, if it has a knowledgeable legal team and pursues those cases enthusiastically, 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 one-half responsible), you'll typically get $500 back, based on the laws in most states.
Furthermore, 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 defense attorney Hillsboro OR, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurers are not created equal. When comparing, it's worth researching the reputations of competing agencies to evaluate if they pursue valid subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their clients posted as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, instead, an insurance firm has a reputation of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you should keep looking.