Subrogation is a term that's well-known among insurance and legal companies but rarely by the customers who hire them. Rather than leave it to the professionals, it is in your benefit to comprehend the nuances of the process. The more information you have about it, the better decisions you can make with regard to your insurance policy.
Any insurance policy you hold is a commitment that, if something bad occurs, the company on the other end of the policy will make good in a timely fashion. If a windstorm damages your real estate, for example, your property insurance steps in to repay you or pay for the repairs, subject to state property damage laws.
But since determining who is financially responsible for services or repairs is typically a tedious, lengthy affair – and delay often compounds the damage to the policyholder – insurance firms in many cases opt to pay up front and assign blame afterward. They then need a method to recover the costs if, when all is said and done, they weren't actually in charge of the expense.
Your electric outlet catches fire and causes $10,000 in house damages. Happily, you have property insurance and it pays out your claim in full. However, in its investigation it finds out that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him liable for the loss. The home has already been fixed up in the name of expediency, but your insurance company is out ten grand. What does the company do next?
How Subrogation Works
This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement 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. 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 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.
How Does This Affect Policyholders?
For a start, if your insurance policy stipulated a deductible, your insurance company wasn't the only one who 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 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 capable legal team and goes after those cases efficiently, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent accountable), you'll typically get $500 back, based on the laws in most states.
Moreover, if the total expense of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as criminal attorney Portland, OR, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurance companies are not the same. When shopping around, it's worth measuring the records of competing companies to evaluate whether they pursue winnable subrogation claims; if they do so quickly; if they keep their policyholders updated as the case goes on; and if they then process successfully won reimbursements quickly 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 safeguarding its income by raising your premiums, you'll feel the sting later.