Subrogation is a term that's understood among insurance and legal firms but sometimes not by the customers they represent. Rather than leave it to the professionals, it would be to your advantage to understand the steps of the process. The more information you have about it, the better decisions you can make with regard to your insurance policy.
An insurance policy you own is a promise that, if something bad occurs, the business that covers the policy will make restitutions in one way or another in a timely manner. If your house suffers fire damage, for example, your property insurance steps in to remunerate you or enable the repairs, subject to state property damage laws.
But since ascertaining who is financially responsible for services or repairs is sometimes a confusing affair – and time spent waiting in some cases adds to the damage to the victim – insurance companies often decide to pay up front and assign blame afterward. They then need a means to recover the costs if, in the end, they weren't actually responsible for the payout.
You go to the hospital with a gouged finger. You hand the receptionist your medical insurance card and he records your policy information. You get taken care of and your insurance company gets a bill for the medical care. But the next day, when you get to your place of employment – where the accident happened – your boss hands you workers compensation paperwork to turn in. Your workers comp policy is actually responsible for the costs, not your medical insurance. It has a vested interest in getting that money back in some way.
How Subrogation Works
This is where subrogation comes in. It is the way 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. Normally, 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, 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 insurer is lax about bringing subrogation cases to court, it might opt to recoup its expenses by raising your premiums. On the other hand, if it has a competent legal team and pursues those cases aggressively, it is doing you a favor as well as itself. If all $10,000 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 culpable), you'll typically get half your deductible back, based on the laws in most states.
Additionally, if the total loss 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 defense lawyer Portland OR, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurers are not the same. When shopping around, it's worth examining the reputations of competing firms to evaluate whether they pursue legitimate subrogation claims; if they do so in a reasonable amount of time; if they keep their customers apprised as the case goes on; and if they then process successfully won reimbursements immediately 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 safeguarding its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.