Subrogation is a term that's well-known in legal and insurance circles but sometimes not by the people who employ them. Even if you've never heard the word before, it would be in your self-interest to understand an overview of how it works. The more knowledgeable you are, the more likely it is that an insurance lawsuit will work out in your favor.
An insurance policy you have is an assurance that, if something bad occurs, the insurer of the policy will make good without unreasonable delay. If you get injured on the job, for instance, your company's workers compensation pays out 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 regularly a heavily involved affair – and delay in some cases adds to the damage to the victim – insurance firms in many cases opt to pay up front and assign blame later. They then need a way to recover the costs if, ultimately, they weren't in charge of the payout.
You are in a car accident. Another car collided with yours. Police are called, you exchange insurance details, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later police tell the insurance companies that the other driver was entirely at fault and his insurance should have paid for the repair of your car. How does your insurance company get its money back?
How Does Subrogation Work?
This is where subrogation comes in. It is the method 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. Usually, only you can sue for damages done to your self 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.
How Does This Affect Policyholders?
For one thing, if your insurance policy stipulated a deductible, your insurer wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to be precise, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its expenses by ballooning your premiums. On the other hand, if it knows which cases it is owed 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 deductible back. If it recovers half (for instance, in a case where you are found 50 percent to blame), you'll typically get half your deductible back, depending on your state laws.
Additionally, if the total cost 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 Criminal Defense Attorney Hillsboro Or, successfully press a subrogation case, it will recover your losses in addition to its own.
All insurers are not created equal. When shopping around, it's worth researching the records of competing companies to find out if they pursue valid subrogation claims; if they resolve those claims without delay; if they keep their customers posted as the case continues; 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 firm has a record of paying out claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you should keep looking.