Subrogation is a concept that's understood among insurance and legal firms but sometimes not by the policyholders who employ them. Even if you've never heard the word before, it is in your benefit to understand an overview of how it works. The more you know about it, the more likely it is that relevant proceedings will work out favorably.
Any insurance policy you own is a promise that, if something bad happens to you, the insurer of the policy will make good in one way or another in a timely manner. If you get hurt while you're on the clock, your company's workers compensation pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since ascertaining who is financially accountable for services or repairs is regularly a confusing affair – and delay sometimes increases the damage to the policyholder – insurance firms in many cases decide to pay up front and assign blame afterward. They then need a path to get back the costs if, in the end, they weren't actually responsible for the payout.
Let's Look at an Example
Your garage catches fire and causes $10,000 in home damages. Fortunately, you have property insurance and it pays out your claim in full. However, the assessor assigned to your case discovers that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him accountable for the damages. You already have your money, 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 way 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. Usually, 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 a start, if you have a deductible, your insurer wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to get back its losses by upping your premiums and call it a day. On the other hand, if it has a competent legal team and pursues those cases enthusiastically, it is acting both in its own interests and in yours. 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 one-half accountable), you'll typically get $500 back, depending on the laws in your state.
Moreover, if the total price 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 Family law attorney Portland OR, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurance agencies are not the same. When comparing, it's worth weighing the records of competing agencies to determine if they pursue valid subrogation claims; if they do so in a reasonable amount of time; if they keep their clients advised as the case goes on; 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 insurer has a record of paying out claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you'll feel the sting later.