Subrogation is a concept that's understood among legal and insurance companies but rarely by the customers they represent. Even if you've never heard the word before, it would be in your benefit to understand an overview of how it works. The more knowledgeable you are, the better decisions you can make about your insurance policy.
Any insurance policy you have is a commitment 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 an injury at work, your employer's workers compensation agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially accountable for services or repairs is often a heavily involved affair – and delay in some cases increases the damage to the policyholder – insurance firms in many cases decide to pay up front and figure out the blame afterward. They then need a method to get back the costs if, in the end, they weren't actually responsible for the payout.
Can You Give an Example?
Your bedroom catches fire and causes $10,000 in home damages. Fortunately, you have property insurance and it pays for the repairs. However, the insurance investigator discovers that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him accountable for the loss. The home has already been fixed up in the name of expediency, but your insurance firm is out $10,000. What does the firm do next?
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim payment 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. Normally, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is extended some of your rights for having taken care of the damages. It can go after the money that was originally due to you, because it has covered the amount already.
Why Do I Need to Know This?
For a start, if your insurance policy stipulated a deductible, your insurance company wasn't the only one 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 insurance company is timid on any subrogation case it might not win, it might opt to recover 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 enthusiastically, it is doing you a favor as well as itself. If all $10,000 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 accountable), you'll typically get $500 back, depending on your state laws.
Moreover, if the total loss of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as criminal lawyer Hillsboro, OR, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurance companies are not the same. When shopping around, it's worth looking at the reputations of competing companies to determine whether they pursue legitimate subrogation claims; if they do so fast; if they keep their customers posted 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, on the other hand, an insurance agency has a reputation of honoring claims that aren't its responsibility and then covering its bottom line by raising your premiums, you'll feel the sting later.