Subrogation is a concept that's well-known in legal and insurance circles but rarely by the policyholders who hire them. Even if it sounds complicated, it would be in your self-interest to comprehend the steps of how it works. The more information you have about it, the more likely an insurance lawsuit will work out in your favor.
An insurance policy you have is an assurance that, if something bad occurs, the business on the other end of the policy will make restitutions in one way or another in a timely fashion. If your vehicle is in a fender-bender, insurance adjusters (and the courts, when necessary) determine who was at fault and that person's insurance covers the damages.
But since ascertaining who is financially responsible for services or repairs is usually a time-consuming affair – and time spent waiting sometimes compounds the damage to the policyholder – insurance firms in many cases decide to pay up front and figure out the blame afterward. They then need a method to recoup the costs if, when there is time to look at all the facts, they weren't actually in charge of the payout.
For Example
You rush into the emergency room with a sliced-open finger. You give the nurse your medical insurance card and he records your policy details. You get stitched up and your insurer gets a bill for the tab. But the next afternoon, when you clock in at work – where the accident occurred – you are given workers compensation paperwork to turn in. Your workers comp policy is actually responsible for the costs, not your medical insurance policy. It has a vested interest in getting that money back somehow.
How Does Subrogation Work?
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 insurance firms 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 person or property. But under subrogation law, your insurer is extended 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.
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 have a stake in the outcome as well – to be precise, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recover its expenses by increasing your premiums and call it a day. On the other hand, if it has a capable legal team and pursues those cases enthusiastically, it is doing you a favor as well as itself. If all is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half accountable), you'll typically get half your deductible back, depending on the laws in your state.
Moreover, if the total price 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 Hillsboro OR, pursue subrogation and succeeds, it will recover your costs as well as its own.
All insurers are not created equal. When shopping around, it's worth looking at the records of competing firms to find out whether they pursue winnable subrogation claims; if they resolve those claims fast; if they keep their clients posted 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 insurer has a record of paying out 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.