Subrogation is a term that's understood in insurance and legal circles but often not by the people they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your self-interest to understand the steps of the process. The more information you have about it, the more likely relevant proceedings will work out favorably.
Any insurance policy you have is a commitment that, if something bad happens to you, the business on the other end of the policy will make good in one way or another in a timely manner. If your home is robbed, your property insurance steps in to compensate you or facilitate the repairs, subject to state property damage laws.
But since figuring out who is financially accountable for services or repairs is regularly a time-consuming affair – and delay often adds to the damage to the victim – insurance firms usually opt to pay up front and assign blame afterward. They then need a path to regain the costs if, when all the facts are laid out, they weren't responsible for the payout.
Can You Give an Example?
You are in an auto accident. Another car ran 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 it's determined 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 funds back?
How Does Subrogation Work?
This is where subrogation comes in. It is the process that an insurance company uses to claim payment 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. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is given some of your rights 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 the Insured?
For starters, if you have a deductible, your insurance company 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 insurance company is timid on any subrogation case it might not win, it might choose to recover its costs by raising your premiums. On the other hand, if it has a knowledgeable legal team and goes after those cases enthusiastically, it is acting both in its own interests and in yours. 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 accountable), you'll typically get $500 back, based on the laws in most states.
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 law Portland OR, pursue subrogation and wins, it will recover your expenses as well as its own.
All insurers are not the same. When comparing, it's worth contrasting the records of competing firms to determine if they pursue winnable subrogation claims; if they do so without dragging their feet; if they keep their accountholders posted as the case goes on; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then protecting its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.