Subrogation is a concept that's understood in insurance and legal circles but sometimes not by the policyholders they represent. Even if you've never heard the word before, it is to your advantage to understand the steps of the process. The more information you have about it, the better decisions you can make about your insurance company.
An insurance policy you own is a promise that, if something bad occurs, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If your real estate burns down, for example, your property insurance agrees to remunerate you or enable the repairs, subject to state property damage laws.
But since ascertaining who is financially responsible for services or repairs is sometimes a heavily involved affair – and delay sometimes compounds the damage to the victim – insurance firms in many cases opt to pay up front and figure out the blame after the fact. They then need a method to recover the costs if, when there is time to look at all the facts, they weren't in charge of the payout.
Can You Give an Example?
You rush into the hospital with a sliced-open finger. You hand the nurse your medical insurance card and she takes down your coverage information. You get taken care of and your insurer gets a bill for the expenses. But on the following morning, when you arrive at your workplace – where the injury happened – your boss hands you workers compensation forms to fill out. Your company's workers comp policy is in fact responsible for the invoice, not your medical insurance policy. It has a vested interest in getting that money back in some way.
How Does Subrogation Work?
This is where subrogation comes in. It is the way 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. Under ordinary circumstances, only you can sue for damages done 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 originally due to you, because it has covered the amount already.
How Does This Affect Me?
For a start, 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 unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its costs by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them aggressively, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full 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, based on the laws in most states.
Furthermore, 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 lawyer Hillsboro, OR, successfully press a subrogation case, it will recover your losses as well as its own.
All insurance agencies are not the same. When comparing, it's worth looking up the records of competing companies to find out if they pursue winnable subrogation claims; if they do so without delay; if they keep their policyholders advised as the case continues; 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 firm has a reputation of honoring claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you should keep looking.