Subrogation and How It Affects Your Insurance Policy

Subrogation is a concept that's well-known among legal and insurance firms but often not by the people who employ them. Rather than leave it to the professionals, it is in your benefit to know an overview of how it works. The more information you have, the more likely it is that an insurance lawsuit will work out in your favor.

Any insurance policy you own is an assurance that, if something bad occurs, the insurer of the policy will make good in a timely manner. If you get an injury while you're on the clock, for instance, your employer's workers compensation insurance pays out for medical services. Employment lawyers handle the details; you just get fixed up.

But since ascertaining who is financially accountable for services or repairs is regularly a tedious, lengthy affair – and delay sometimes compounds the damage to the victim – insurance companies often opt to pay up front and figure out the blame afterward. They then need a way to get back the costs if, when there is time to look at all the facts, they weren't responsible for the expense.

Can You Give an Example?

You are in a car accident. Another car ran into yours. Police are called, you exchange insurance details, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later police tell the insurance companies that the other driver was at fault and her insurance policy should have paid for the repair of your auto. How does your insurance company get its money back?

How Does Subrogation Work?

This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement after it has paid for something that should have been paid by some other entity. 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. Usually, 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 in exchange for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.

Why Does This Matter to Me?

For starters, 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 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 losses by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases aggressively, 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 responsible), you'll typically get half your deductible back, based on the laws in most states.

Moreover, if the total loss of an accident is more than 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 succeeds, it will recover your costs in addition to its own.

All insurance agencies are not the same. When shopping around, it's worth researching the records of competing agencies to find out whether they pursue winnable subrogation claims; if they do so with some expediency; if they keep their customers informed as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, instead, an insurance firm has a reputation of paying out claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you'll feel the sting later.