Subrogation and How It Affects You

Subrogation is an idea that's well-known among insurance and legal professionals but rarely by the customers they represent. Even if it sounds complicated, it is in your benefit to know an overview of how it works. The more information you have about it, the more likely it is that an insurance lawsuit will work out in your favor.

Every insurance policy you own is a promise that, if something bad occurs, the insurer of the policy will make restitutions in a timely fashion. If a fire damages your real estate, for example, your property insurance steps in to pay you or pay for the repairs, subject to state property damage laws.

But since figuring out who is financially accountable for services or repairs is usually a time-consuming affair – and time spent waiting often compounds the damage to the policyholder – insurance firms often opt to pay up front and assign blame afterward. They then need a method to recoup the costs if, once the situation is fully assessed, they weren't responsible for the payout.

Can You Give an Example?

You go to the doctor's office with a sliced-open finger. You hand the receptionist your health insurance card and she takes down your plan details. You get stitches and your insurance company is billed for the tab. But on the following morning, when you get to your workplace – where the accident happened – your boss hands you workers compensation paperwork to fill out. Your company's workers comp policy is in fact responsible for the expenses, not your health insurance. The latter has a right to recover its money in some way.

How Does Subrogation Work?

This is where subrogation comes in. It is the method 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. Normally, 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 having taken care of 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 a start, if you have a deductible, your insurance company 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 unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its losses by ballooning your premiums. On the other hand, if it has a knowledgeable legal team and pursues those cases aggressively, it is doing you a favor as well as itself. 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 to blame), you'll typically get $500 back, based on the laws in most states.

Moreover, if the total price of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as criminal law Portland OR, pursue subrogation and wins, it will recover your losses as well as its own.

All insurance agencies are not created equal. When comparing, it's worth measuring the reputations of competing companies to determine whether they pursue valid subrogation claims; if they resolve those claims with some expediency; if they keep their clients updated as the case proceeds; 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 reputation of paying out claims that aren't its responsibility and then protecting its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.