Subrogation is an idea that's well-known in insurance and legal circles but often not by the customers they represent. Rather than leave it to the professionals, it would be to your advantage to comprehend the nuances of how it works. The more knowledgeable you are about it, the more likely it is that an insurance lawsuit will work out in your favor.
Any insurance policy you hold is an assurance that, if something bad occurs, the company on the other end of the policy will make restitutions in one way or another in a timely fashion. If you get an injury on the job, for example, your employer's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since figuring out who is financially responsible for services or repairs is usually a time-consuming affair – and time spent waiting often adds to the damage to the policyholder – insurance firms usually decide to pay up front and assign blame later. They then need a path to get back the costs if, ultimately, they weren't actually responsible for the expense.
Let's Look at an Example
Your electric outlet catches fire and causes $10,000 in house damages. Luckily, you have property insurance and it takes care of the repair expenses. However, the insurance investigator discovers that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him responsible for the damages. The house has already been repaired in the name of expediency, but your insurance company is out $10,000. What does the company do next?
How Subrogation Works
This is where subrogation comes in. It is the process 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. Ordinarily, 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 in exchange for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
How Does This Affect Individuals?
For starters, if your insurance policy stipulated a deductible, it wasn't just your insurance company who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to get back its expenses by raising your premiums and call it a day. On the other hand, if it has a proficient legal team and goes after those cases enthusiastically, it is acting both in its own interests and in yours. If all ten grand 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 at fault), you'll typically get $500 back, depending on the laws in your state.
Furthermore, if the total expense of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as criminal lawyer Portland, OR, successfully press a subrogation case, it will recover your costs as well as its own.
All insurers are not the same. When shopping around, it's worth scrutinizing the reputations of competing agencies to find out if they pursue valid subrogation claims; if they do so without delay; if they keep their clients informed as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, on the other hand, an insurance company has a reputation of honoring claims that aren't its responsibility and then protecting its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.