Subrogation is a term that's well-known in legal and insurance circles but often not by the policyholders they represent. Even if it sounds complicated, it would be in your self-interest to understand the steps of how it works. The more you know about it, the more likely it is that an insurance lawsuit will work out favorably.
Any insurance policy you have is a promise that, if something bad happens to you, the insurer of the policy will make good in a timely fashion. If a storm damages your real estate, for example, your property insurance agrees to compensate you or pay for the repairs, subject to state property damage laws.
But since determining who is financially accountable for services or repairs is usually a heavily involved affair – and time spent waiting sometimes adds to the damage to the victim – insurance firms in many cases opt to pay up front and figure out the blame later. They then need a way to get back the costs if, when all is said and done, they weren't responsible for the payout.
You rush into the doctor's office with a deeply cut finger. You give the receptionist your medical insurance card and she takes down your coverage details. You get stitches and your insurer gets an invoice for the expenses. But the next afternoon, when you arrive at your place of employment – where the injury occurred – you are given workers compensation forms to file. Your employer's workers comp policy is actually responsible for the hospital visit, not your medical insurance company. It has a vested interest in getting that money back somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the way that an insurance company uses to claim payment after it has paid for something that should have been paid by some other entity. 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 self or property. But under subrogation law, your insurer is given 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.
Why Should I Care?
For starters, 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 insurance company is timid on any subrogation case it might not win, it might opt to recoup its costs by boosting your premiums. On the other hand, if it has a knowledgeable legal team and goes after those cases enthusiastically, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half culpable), you'll typically get $500 back, depending on the laws in your state.
Moreover, if the total price of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as criminal defense attorney Portland OR, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurers are not created equal. When comparing, it's worth weighing the records of competing agencies to find out if they pursue legitimate subrogation claims; if they resolve those claims fast; 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 losses back and move on with your life. If, on the other hand, an insurance firm has a reputation of honoring claims that aren't its responsibility and then covering its income by raising your premiums, even attractive rates won't outweigh the eventual headache.