Subrogation is an idea that's well-known among insurance and legal firms but often not by the people who hire them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your self-interest to comprehend the steps of the process. The more knowledgeable you are, the more likely an insurance lawsuit will work out in your favor.
Every insurance policy you have is a promise that, if something bad occurs, the business on the other end of the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and police, when necessary) decide who was to blame and that person's insurance covers the damages.
But since determining who is financially accountable for services or repairs is often a time-consuming affair – and time spent waiting sometimes adds to the damage to the victim – insurance companies often decide to pay up front and assign blame later. They then need a method to get back the costs if, when there is time to look at all the facts, they weren't actually responsible for the expense.
Let's Look at an Example
You are in a vehicle 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 to blame and his insurance should have paid for the repair of your vehicle. How does your insurance company get its funds back?
How Subrogation Works
This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement 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 self 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 Should I Care?
For a start, if you have a deductible, your insurer wasn't the only one 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 insurer is timid on any subrogation case it might not win, it might choose to recover its expenses by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases enthusiastically, it is acting both in its own interests and in yours. If all ten grand 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 to blame), you'll typically get half your deductible back, depending on your state laws.
Furthermore, if the total cost of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as family law lawyer Portland OR, pursue subrogation and wins, it will recover your losses as well as its own.
All insurance agencies are not the same. When shopping around, it's worth measuring the reputations of competing companies to determine if they pursue legitimate subrogation claims; if they resolve those claims quickly; if they keep their customers apprised as the case goes on; 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, instead, an insurance agency has a reputation of honoring claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you'll feel the sting later.