Subrogation is an idea that's well-known in legal and insurance circles but rarely by the policyholders they represent. Rather than leave it to the professionals, it is in your benefit to comprehend the steps of the process. The more information you have, the better decisions you can make about your insurance company.
Every 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 your vehicle is in a fender-bender, insurance adjusters (and the courts, when necessary) determine who was to blame and that party's insurance pays out.
But since ascertaining who is financially accountable for services or repairs is usually a tedious, lengthy affair – and delay sometimes increases the damage to the victim – insurance companies often decide to pay up front and figure out the blame later. They then need a mechanism to recoup the costs if, once the situation is fully assessed, they weren't actually in charge of the expense.
Can You Give an Example?
You are in a traffic-light 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 police tell the insurance companies that the other driver was entirely to blame and her insurance policy should have paid for the repair of your auto. How does your insurance company get its funds back?
How Does Subrogation Work?
This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement after it has paid for something that should have been paid by some other entity. 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 to your person 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 that was originally due to you, because it has covered the amount already.
How Does This Affect Policyholders?
For a start, if you have a deductible, your insurer 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 – to the tune of $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its losses by increasing your premiums and call it a day. On the other hand, if it has a proficient legal team and goes after them enthusiastically, it is acting both in its own interests and in yours. 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 at fault), you'll typically get half your deductible back, depending on your state laws.
Additionally, if the total price of an accident is more than your maximum coverage amount, you may have had to pay the difference. 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 expenses in addition to its own.
All insurance agencies are not created equal. When comparing, it's worth looking up the reputations of competing agencies to evaluate whether they pursue winnable subrogation claims; if they do so with some expediency; if they keep their clients apprised as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, instead, an insurance agency has a record of honoring claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.