Subrogation is a term that's understood in legal and insurance circles 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 benefit to know the nuances of how it works. The more you know, the better decisions you can make with regard to your insurance policy.
Any insurance policy you have is a commitment that, if something bad occurs, the business on the other end of the policy will make good in a timely fashion. If you get an injury while you're on the clock, for instance, your company's workers compensation insurance picks up the tab 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 often a tedious, lengthy affair – and time spent waiting often adds to the damage to the victim – insurance companies usually decide to pay up front and assign blame after the fact. They then need a means to recoup the costs if, when all the facts are laid out, they weren't responsible for the payout.
You arrive at the emergency room with a gouged finger. You give the receptionist your health insurance card and she writes down your plan information. You get stitched up and your insurance company gets a bill for the medical care. But the next morning, when you arrive at work – where the injury occurred – your boss hands you workers compensation forms to fill out. Your workers comp policy is actually responsible for the invoice, not your health insurance. It has a vested interest in getting that money back somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the method 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. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is considered to have some of your rights in exchange for having taken care of the damages. It can go after the money that was originally due to you, because it has covered the amount already.
How Does This Affect Policyholders?
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 have a stake in the outcome as well – to be precise, $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to get back its expenses by ballooning your premiums and call it a day. On the other hand, if it has a proficient legal team and goes after them aggressively, it is acting both in its own interests and in yours. 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 50 percent culpable), you'll typically get $500 back, depending on your state laws.
Additionally, if the total price 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 lawyer Hillsboro OR, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurers are not created equal. When shopping around, it's worth looking up the records of competing agencies to evaluate whether they pursue winnable subrogation claims; if they resolve those claims quickly; if they keep their clients updated as the case continues; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, on the other hand, an insurer has a record of paying out claims that aren't its responsibility and then covering its profitability by raising your premiums, you'll feel the sting later.