The Things Every Policy holder Ought to Know About Subrogation

Subrogation is a concept that's understood in legal and insurance circles but often not by the policyholders they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your benefit to understand the steps of the process. The more you know about it, the better decisions you can make with regard to your insurance policy.

Every insurance policy you have is an assurance that, if something bad happens to you, the firm 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 party's insurance pays out.

But since figuring out who is financially responsible for services or repairs is often a tedious, lengthy affair – and time spent waiting sometimes adds to the damage to the victim – insurance firms often opt to pay up front and assign blame after the fact. They then need a means to regain the costs if, when there is time to look at all the facts, they weren't actually responsible for the payout.

For Example

You are in a car accident. Another car ran into yours. The police show up to assess the situation, you exchange insurance details, and you go on your way. You have comprehensive insurance and file a repair claim. Later police tell the insurance companies that the other driver was to blame and his insurance should have paid for the repair of your car. How does your insurance company get its money back?

How Subrogation Works

This is where subrogation comes in. It is the process 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. Under ordinary circumstances, only you can sue for damages to your person or property. But under subrogation law, your insurance company is extended some of your rights in exchange 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 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 – to the tune of $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to recoup its costs by raising your premiums. On the other hand, if it knows which cases it is owed and pursues them 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 50 percent to blame), you'll typically get half your deductible back, based on the laws in most states.

Furthermore, 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 expensive. If your insurance company or its property damage lawyers, such as Family law attorney Portland OR, successfully press a subrogation case, it will recover your costs as well as its own.

All insurance companies are not the same. When comparing, it's worth scrutinizing the reputations of competing firms to determine if they pursue legitimate subrogation claims; if they resolve those claims with some expediency; if they keep their clients updated as the case continues; and if they then process successfully won reimbursements right away so that you can get your funding 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 profit margin by raising your premiums, you'll feel the sting later.