Subrogation is an idea that's well-known among insurance and legal firms but rarely by the policyholders who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your self-interest to understand an overview of how it works. The more you know, the better decisions you can make with regard to your insurance policy.
Every insurance policy you own is an assurance that, if something bad happens to you, the firm that insures the policy will make restitutions without unreasonable delay. If a blizzard damages your property, for example, your property insurance steps in to pay you or pay for the repairs, subject to state property damage laws.
But since figuring out who is financially responsible for services or repairs is regularly a tedious, lengthy affair – and delay sometimes compounds the damage to the policyholder – insurance companies usually opt to pay up front and assign blame afterward. They then need a mechanism to regain the costs if, when all the facts are laid out, they weren't responsible for the expense.
You go to the Instacare with a gouged finger. You hand the receptionist your health insurance card and she takes down your policy information. You get stitches and your insurer gets an invoice for the medical care. But on the following morning, when you arrive at your place of employment – where the injury occurred – you are given workers compensation paperwork to fill out. Your workers comp policy is in fact responsible for the bill, not your health insurance. 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 process that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. Some companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Ordinarily, only you can sue for damages 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 originally due to you, because it has covered the amount already.
How Does This Affect Policyholders?
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 unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its costs by ballooning your premiums. On the other hand, if it knows which cases it is owed and pursues those cases efficiently, it is doing you a favor as well as itself. If all of the money is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found one-half at fault), you'll typically get half your deductible back, depending on your state laws.
In addition, if the total loss of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as criminal law defense attorney Hillsboro OR, pursue subrogation and wins, it will recover your losses as well as its own.
All insurance companies are not created equal. When comparing, it's worth researching the reputations of competing companies to find out whether they pursue winnable subrogation claims; if they resolve those claims without delay; if they keep their accountholders updated 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 paying out claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.