Subrogation is a concept that's well-known in legal and insurance circles but rarely by the people they represent. Even if it sounds complicated, it is in your benefit to know the nuances of the process. The more knowledgeable you are, the better decisions you can make about your insurance company.
Any insurance policy you own is an assurance that, if something bad occurs, the firm on the other end of the policy will make restitutions in a timely fashion. If you get hurt while you're on the clock, for example, your employer's workers compensation insurance agrees to pay 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 typically a tedious, lengthy affair – and time spent waiting often compounds the damage to the victim – insurance firms usually opt to pay up front and figure out the blame afterward. They then need a means to get back the costs if, once the situation is fully assessed, they weren't actually responsible for the expense.
Let's Look at an Example
You arrive at the hospital with a gouged finger. You hand the nurse your medical insurance card and she writes down your coverage details. You get stitched up and your insurance company gets a bill for the tab. But the next afternoon, when you clock in at your workplace – where the accident happened – your boss hands you workers compensation paperwork to turn in. Your workers comp policy is actually responsible for the costs, not your medical insurance. 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 way 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 done to your person or property. But under subrogation law, your insurance company is extended some of your rights 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 Individuals?
For one thing, if you have a deductible, it wasn't just your insurance company who 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 choose to get back its losses by raising your premiums and call it a day. On the other hand, if it has a proficient legal team and pursues those cases efficiently, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get half your deductible back, depending on your state laws.
Moreover, if the total expense of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as criminal lawyer Portland, OR, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurers are not the same. When comparing, it's worth comparing the records of competing firms to find out whether they pursue valid subrogation claims; if they do so fast; if they keep their customers posted as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, instead, an insurance agency has a reputation of honoring claims that aren't its responsibility and then safeguarding its income by raising your premiums, you should keep looking.