Subrogation is an idea that's understood in legal and insurance circles but sometimes not by the people who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your self-interest to know the nuances of the process. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance policy.
An insurance policy you hold is an assurance that, if something bad occurs, the company that covers the policy will make good without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and the judicial system, when necessary) decide who was at fault and that person's insurance pays out.
But since determining who is financially responsible for services or repairs is typically a time-consuming affair – and delay often compounds the damage to the policyholder – insurance companies often decide to pay up front and assign blame afterward. They then need a mechanism to recover the costs if, in the end, they weren't in charge of the expense.
Can You Give an Example?
Your living room catches fire and causes $10,000 in house damages. Luckily, you have property insurance and it pays for the repairs. However, the insurance investigator finds out that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him accountable for the damages. You already have your money, but your insurance firm is out ten grand. What does the firm do next?
How Does Subrogation Work?
This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement 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. Under ordinary circumstances, 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 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 a start, if you have a deductible, it wasn't just your insurer who 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 lax about bringing subrogation cases to court, it might opt to recoup its expenses by increasing your premiums. On the other hand, if it knows which cases it is owed and goes after those cases efficiently, 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 50 percent culpable), you'll typically get half your deductible back, depending on the laws in your state.
Additionally, if the total loss of an accident is over 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 Hillsboro OR, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurance agencies are not the same. When comparing, it's worth looking at the records of competing agencies to determine whether they pursue winnable subrogation claims; if they resolve those claims with some expediency; if they keep their customers posted as the case goes on; 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 company has a record of paying out claims that aren't its responsibility and then covering its profitability by raising your premiums, you should keep looking.