Subrogation is a term that's understood in legal and insurance circles but often not by the people who hire them. Even if it sounds complicated, it is to your advantage to comprehend the steps of how it works. The more knowledgeable you are, the better decisions you can make about your insurance policy.
Every insurance policy you have is an assurance that, if something bad happens to you, the firm on the other end of the policy will make good in a timely fashion. If you get hurt at work, your company's workers compensation agrees to pay 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 sometimes a time-consuming affair – and delay in some cases increases the damage to the policyholder – insurance firms usually opt to pay up front and figure out the blame later. They then need a means to get back the costs if, when all the facts are laid out, they weren't actually in charge of the payout.
Let's Look at an Example
You are in a highway 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 and file a repair claim. Later it's determined that the other driver was to blame and her insurance policy should have paid for the repair of your auto. 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 reimbursement after it has paid for something that should have been paid by some other entity. 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. Ordinarily, only you can sue for damages done to your self or property. But under subrogation law, your insurer is given 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.
Why Does This Matter to Me?
For starters, 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 – to be precise, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its expenses by ballooning your premiums. On the other hand, if it has a proficient legal team and pursues them efficiently, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half at fault), you'll typically get half your deductible back, depending on your state laws.
Moreover, if the total expense of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as criminal law defense lawyer Portland OR, pursue subrogation and succeeds, it will recover your expenses in addition to its own.
All insurance agencies are not created equal. When comparing, it's worth comparing the records of competing companies to evaluate whether they pursue winnable subrogation claims; if they do so without delay; if they keep their clients updated as the case goes on; and if they then process successfully won reimbursements right away so that you can get your money 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 covering its income by raising your premiums, you should keep looking.