Subrogation is a term that's well-known in legal and insurance circles but rarely by the policyholders who hire them. Even if you've never heard the word before, it is in your self-interest to understand an overview of the process. The more you know about it, the more likely relevant proceedings will work out in your favor.
Any insurance policy you own is an assurance that, if something bad happens to you, the business on the other end of the policy will make good in one way or another without unreasonable delay. If a fire damages your home, your property insurance steps in to pay you or enable the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is usually a tedious, lengthy affair – and time spent waiting often increases the damage to the victim – insurance companies often opt to pay up front and assign blame afterward. They then need a means to get back the costs if, ultimately, they weren't actually in charge of the payout.
Can You Give an Example?
Your kitchen catches fire and causes $10,000 in home damages. Happily, you have property insurance and it pays out your claim in full. However, the insurance investigator discovers that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him to blame for the loss. You already have your money, but your insurance agency is out ten grand. What does the agency do next?
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 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 to your person or property. But under subrogation law, your insurance company is considered to have some of your rights in exchange for making good on the damages. It can go after the money that was originally due to you, because it has covered the amount already.
Why Do I Need to Know This?
For a start, 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 have a stake in the outcome as well – to be precise, $1,000. If your insurer 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 has a knowledgeable legal team and goes after those cases aggressively, it is acting both in its own interests and in yours. If all ten grand 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 accountable), you'll typically get half your deductible back, depending on your state laws.
Additionally, if the total cost of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as criminal attorney Hillsboro, OR, pursue subrogation and wins, it will recover your losses in addition to its own.
All insurance agencies are not created equal. When comparing, it's worth comparing the reputations of competing agencies to evaluate if they pursue legitimate subrogation claims; if they resolve those claims quickly; if they keep their customers informed as the case continues; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, on the other hand, an insurer has a reputation of honoring claims that aren't its responsibility and then covering its bottom line by raising your premiums, you'll feel the sting later.