Subrogation and How It Affects You

Subrogation is a term that's well-known in insurance and legal circles but often not by the policyholders they represent. Even if it sounds complicated, it would be to your advantage to comprehend an overview of how it works. The more you know about it, the more likely it is that an insurance lawsuit will work out favorably.

An insurance policy you hold is a commitment that, if something bad occurs, the business that insures the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is hit, insurance adjusters (and the judicial system, when necessary) decide who was at fault and that person's insurance covers the damages.

But since determining who is financially accountable for services or repairs is sometimes a heavily involved affair – and delay in some cases adds to the damage to the policyholder – insurance firms usually opt to pay up front and assign blame after the fact. They then need a means to regain the costs if, when all the facts are laid out, they weren't actually in charge of the expense.

Let's Look at an Example

Your living room catches fire and causes $10,000 in house damages. Happily, you have property insurance and it takes care of the repair expenses. However, the insurance investigator finds out that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him accountable for the loss. The home has already been fixed up in the name of expediency, but your insurance firm is out all that money. What does the firm do next?

How Subrogation Works

This is where subrogation comes in. It is the process 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. Usually, only you can sue for damages done to your person or property. But under subrogation law, your insurer is given 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.

How Does This Affect Policyholders?

For a start, if your insurance policy stipulated a deductible, it wasn't just your insurer 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 timid on any subrogation case it might not win, it might choose to recover its expenses by raising your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases efficiently, it is doing you a favor as well as itself. If all ten grand 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 to blame), you'll typically get half your deductible back, depending on the laws in your state.

Moreover, 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 costly. If your insurance company or its property damage lawyers, such as criminal law defense attorney Hillsboro OR, successfully press a subrogation case, it will recover your losses as well as its own.

All insurers are not created equal. When shopping around, it's worth contrasting the reputations of competing companies to determine if they pursue winnable subrogation claims; if they do so quickly; if they keep their clients apprised as the case goes on; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, instead, an insurance firm has a reputation of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you should keep looking.