Subrogation is a concept that's understood in insurance and legal circles but often not by the customers they represent. Even if it sounds complicated, it is in your self-interest to comprehend the steps of how it works. The more information you have about it, the better decisions you can make with regard to your insurance company.
Any insurance policy you own is a promise that, if something bad occurs, the business on the other end of the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and police, when necessary) determine who was at fault and that party's insurance covers the damages.
But since determining who is financially accountable for services or repairs is typically a confusing affair – and time spent waiting sometimes compounds the damage to the policyholder – insurance firms in many cases opt to pay up front and assign blame afterward. They then need a mechanism to recoup the costs if, ultimately, they weren't actually in charge of the expense.
Let's Look at an Example
You rush into the doctor's office with a gouged finger. You give the nurse your health insurance card and he writes down your policy details. You get stitches and your insurer gets an invoice for the services. But the next morning, when you arrive at your workplace – where the injury occurred – your boss hands you workers compensation paperwork to turn in. Your employer's workers comp policy is in fact responsible for the expenses, not your health insurance company. It has a vested interest in getting that money back somehow.
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. 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 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.
How Does This Affect Individuals?
For starters, if you have a deductible, it wasn't just your insurer 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 unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its expenses by boosting your premiums. On the other hand, if it knows which cases it is owed and goes after those cases enthusiastically, 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 responsible), you'll typically get half your deductible back, based on the laws in most states.
Furthermore, if the total cost 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 law defense lawyer Portland OR, pursue subrogation and wins, it will recover your losses in addition to its own.
All insurers are not the same. When shopping around, it's worth researching the records of competing agencies to evaluate whether they pursue valid subrogation claims; if they do so quickly; if they keep their policyholders apprised as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your money 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 protecting its bottom line by raising your premiums, you'll feel the sting later.