What Every Policy holder Ought to Know About Subrogation
Subrogation is a term that's understood among legal and insurance companies but often not by the customers who hire them. Rather than leave it to the professionals, it is in your benefit to know 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 own is an assurance that, if something bad happens to you, the business on the other end of the policy will make good in one way or another without unreasonable delay. If your house burns down, your property insurance agrees to repay you or pay for the repairs, subject to state property damage laws.
But since ascertaining who is financially accountable for services or repairs is often a time-consuming affair – and time spent waiting sometimes increases the damage to the policyholder – insurance companies usually opt to pay up front and figure out the blame later. They then need a method to recover the costs if, once the situation is fully assessed, they weren't actually in charge of the expense.
Let's Look at an Example
You arrive at the doctor's office with a sliced-open finger. You hand the receptionist your health insurance card and he writes down your policy details. You get stitches and your insurer gets an invoice for the expenses. But the next afternoon, when you clock in at your workplace – where the accident happened – your boss hands you workers compensation paperwork to turn in. Your workers comp policy is in fact responsible for the payout, not your health insurance company. It has a vested interest in getting that money back somehow.
How Does Subrogation Work?
This is where subrogation comes in. It is the process that an insurance company uses to claim payment 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. Ordinarily, only you can sue for damages 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 originally due to you, because it has covered the amount already.
How Does This Affect Me?
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 – to the tune of $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to recover its losses by boosting your premiums and call it a day. On the other hand, if it has a competent legal team 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 thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half responsible), you'll typically get half your deductible back, depending on the laws in your state.
In addition, if the total loss 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 defense attorney Portland OR, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurance companies are not the same. When shopping around, it's worth weighing the reputations of competing firms to evaluate whether they pursue valid subrogation claims; if they do so fast; if they keep their customers advised 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, on the other hand, an insurance agency has a reputation of honoring claims that aren't its responsibility and then covering its income by raising your premiums, you should keep looking.