Subrogation and How It Affects Policyholders

Subrogation is a term that's understood in insurance and legal circles but rarely by the customers who employ them. Rather than leave it to the professionals, it is in your self-interest to comprehend the nuances of how it works. The more knowledgeable you are about it, the more likely it is that relevant proceedings will work out in your favor.

Every insurance policy you hold is a promise that, if something bad happens to you, the insurer of the policy will make restitutions without unreasonable delay. If your property is broken into, for instance, 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 responsible for services or repairs is regularly a time-consuming affair – and time spent waiting sometimes adds to the damage to the policyholder – insurance firms in many cases opt to pay up front and assign blame later. They then need a method to recoup the costs if, once the situation is fully assessed, they weren't in charge of the payout.

For Example

Your kitchen catches fire and causes $10,000 in home damages. Happily, you have property insurance and it pays for the repairs. However, the insurance investigator discovers that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him liable for the loss. You already have your money, but your insurance firm is out ten grand. What does the firm do next?

How Does Subrogation Work?

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. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is considered to have 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 Do I Need to Know This?

For starters, 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 have a stake in the outcome as well – namely, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to recoup its expenses by upping your premiums. On the other hand, if it knows which cases it is owed and goes after them enthusiastically, it is acting both in its own interests and in yours. If all 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 culpable), you'll typically get half your deductible back, based on the laws in most states.

Furthermore, if the total loss of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as criminal att orney Hillsboro, OR, pursue subrogation and wins, it will recover your losses as well as its own.

All insurers are not the same. When comparing, it's worth looking up the reputations of competing companies to find out if they pursue legitimate subrogation claims; if they do so with some expediency; if they keep their policyholders apprised 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, instead, an insurance agency has a record of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.