An insurance policy you hold is a commitment that, if something bad happens to you, the business that insures the policy will make restitutions in one way or another in a timely manner. If you get an injury on the job, for example, your employer's workers compensation agrees to pay 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 sometimes a confusing affair – and delay sometimes adds to the damage to the victim – insurance companies often decide to pay up front and assign blame after the fact. They then need a method to regain the costs if, when all the facts are laid out, they weren't actually responsible for the payout.
Let's Look at an Example
Your garage catches fire and causes $10,000 in house damages. Luckily, you have property insurance and it takes care of the repair expenses. However, in its investigation it discovers that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him responsible for the damages. The home has already been repaired in the name of expediency, but your insurance company is out ten grand. What does the company do next?
How Does Subrogation Work?
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. Under ordinary circumstances, only you can sue for damages done to your self 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 Me?
For a start, if you have a deductible, your insurance company wasn't the only one 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 insurance company is lax about bringing subrogation cases to court, it might choose to get back its expenses by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them aggressively, it is doing you a favor as well as itself. If all of the money is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent responsible), you'll typically get $500 back, based on the laws in most states.
Moreover, if the total price of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as criminal defense lawyer near me Hillsboro OR, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurance companies are not the same. When comparing, it's worth scrutinizing the records of competing agencies to evaluate if they pursue legitimate subrogation claims; if they do so in a reasonable amount of time; if they keep their policyholders advised as the case continues; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, instead, an insurance agency has a reputation of paying out claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you should keep looking.
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