Subrogation is a concept that's understood in insurance and legal circles but rarely by the customers who hire them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is to your advantage to understand the steps of the process. The more information you have about it, the more likely it is that an insurance lawsuit will work out in your favor.
Any insurance policy you hold is a promise that, if something bad happens to you, the company that covers the policy will make restitutions in one way or another without unreasonable delay. If you get injured while you're on the clock, for example, your company's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially responsible for services or repairs is often a confusing affair – and delay in some cases adds to the damage to the victim – insurance firms often opt to pay up front and figure out the blame afterward. They then need a method to get back the costs if, when all the facts are laid out, they weren't actually responsible for the payout.
Let's Look at an Example
You are in a traffic-light accident. Another car crashed into yours. The police show up to assess the situation, you exchange insurance details, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later it's determined that the other driver was to blame and his insurance should have paid for the repair of your auto. How does your insurance company get its money back?
How Does Subrogation Work?
This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement 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 done to your person 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 originally due to you, because it has covered the amount already.
Why Does This Matter to Me?
For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurer who 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 insurance company is lax about bringing subrogation cases to court, it might opt to recoup its losses by raising your premiums. On the other hand, if it has a proficient legal team and goes after them enthusiastically, it is acting both in its own interests and in yours. If all 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 accountable), you'll typically get half your deductible back, based on the laws in most states.
In addition, if the total price 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 law defense attorney Hillsboro OR, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurance agencies are not the same. When shopping around, it's worth contrasting the reputations of competing firms to evaluate whether they pursue legitimate subrogation claims; if they do so without dragging their feet; if they keep their accountholders posted as the case continues; and if they then process successfully won reimbursements right away so that you can get your losses back and move on with your life. If, on the other hand, an insurance firm has a reputation of honoring claims that aren't its responsibility and then protecting its profitability by raising your premiums, you should keep looking.