Subrogation is a concept that's understood in legal and insurance circles but sometimes not by the policyholders they represent. Even if it sounds complicated, it would be in your self-interest to understand an overview of the process. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance policy.
Any insurance policy you own is an assurance that, if something bad occurs, the company that insures the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and police, when necessary) determine who was to blame and that person's insurance covers the damages.
But since figuring out who is financially accountable for services or repairs is often a heavily involved affair – and time spent waiting sometimes adds to the damage to the policyholder – insurance companies in many cases decide to pay up front and assign blame later. They then need a way to get back the costs if, in the end, they weren't actually responsible for the payout.
For Example
You are in a highway accident. Another car crashed into yours. Police are called, you exchange insurance information, 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 to blame and her insurance should have paid for the repair of your vehicle. How does your insurance company get its money back?
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 companies 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 insurer is given some of your rights in exchange 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 Does This Matter to Me?
For starters, if your insurance policy stipulated a deductible, your insurer wasn't the only one that 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 insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its costs by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases enthusiastically, it is doing you a favor as well as itself. If all is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found one-half responsible), you'll typically get $500 back, depending on the laws in your state.
Furthermore, if the total expense 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 lawyer near me Portland OR, pursue subrogation and wins, it will recover your costs in addition to its own.
All insurers are not created equal. When comparing, it's worth comparing the records of competing companies to evaluate whether they pursue winnable subrogation claims; if they do so in a reasonable amount of time; if they keep their accountholders advised 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, on the other hand, an insurance firm has a record of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, you should keep looking.