Subrogation is a concept that's understood among legal and insurance companies but sometimes not by the people they represent. Even if you've never heard the word before, it would be in your self-interest to understand the steps of how it works. The more you know about it, the better decisions you can make about your insurance policy.
An insurance policy you hold is a promise that, if something bad happens to you, the firm that covers the policy will make restitutions in a timely manner. If you get hurt on the job, for example, your employer's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially accountable for services or repairs is usually a confusing affair – and delay often adds to the damage to the policyholder – insurance firms often decide to pay up front and figure out the blame later. They then need a way to recover the costs if, when all is said and done, they weren't in charge of the expense.
Can You Give an Example?
You arrive at the hospital with a gouged finger. You give the nurse your health insurance card and he takes down your policy information. You get stitched up and your insurer is billed for the medical care. But on the following afternoon, when you clock in at work – where the accident happened – you are given workers compensation paperwork to file. Your workers comp policy is in fact responsible for the hospital visit, not your health insurance company. It has a vested interest in getting that money back in some way.
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement 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 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 insurer wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to recoup its costs by raising your premiums. On the other hand, if it knows which cases it is owed and goes after those cases efficiently, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half accountable), you'll typically get $500 back, depending on the laws in your state.
Moreover, 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 attorney Hillsboro, OR, pursue subrogation and succeeds, it will recover your losses as well as its own.
All insurance agencies are not the same. When shopping around, it's worth looking at the reputations of competing agencies to determine if they pursue valid subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their customers apprised as the case goes on; 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 insurer has a record of paying out claims that aren't its responsibility and then covering its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.