Subrogation is a concept that's well-known among legal and insurance professionals but sometimes not by the policyholders who hire them. Rather than leave it to the professionals, it is in your benefit to understand the nuances of the process. The more you know about it, the more likely relevant proceedings will work out favorably.
An insurance policy you own is a promise that, if something bad occurs, the firm on the other end of the policy will make restitutions without unreasonable delay. If a fire damages your real estate, your property insurance steps in to pay you or pay for the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is sometimes a tedious, lengthy affair – and delay in some cases increases the damage to the policyholder – insurance companies in many cases decide to pay up front and assign blame afterward. They then need a mechanism to get back the costs if, when all the facts are laid out, they weren't in charge of the expense.
Let's Look at an Example
Your garage catches fire and causes $10,000 in house damages. Happily, you have property insurance and it pays out your claim in full. However, the insurance investigator discovers that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him accountable for the damages. The home has already been repaired in the name of expediency, but your insurance company is out $10,000. What does the company do next?
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim payment 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. Under ordinary circumstances, only you can sue for damages to your self or property. But under subrogation law, your insurance company is extended some of your rights 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 Individuals?
For starters, if your insurance policy stipulated a deductible, it wasn't just your insurance company 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 timid on any subrogation case it might not win, it might choose to get back its losses by boosting your premiums. On the other hand, if it has a capable legal team and pursues those cases enthusiastically, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half accountable), you'll typically get $500 back, depending on the laws in your state.
Additionally, 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 spendy. If your insurance company or its property damage lawyers, such as criminal defense attorney Portland OR, pursue subrogation and wins, it will recover your expenses in addition to its own.
All insurance agencies are not created equal. When comparing, it's worth looking at the reputations of competing companies to evaluate whether they pursue winnable subrogation claims; if they do so fast; if they keep their accountholders posted as the case continues; 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 insurance company has a reputation of honoring claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you'll feel the sting later.