The Things You Need to Know About Subrogation

Subrogation is an idea that's understood among insurance and legal firms but rarely by the policyholders who hire them. Even if it sounds complicated, it is in your self-interest to know an overview of how it works. The more information you have about it, the more likely it is that relevant proceedings will work out in your favor.

An insurance policy you hold is a commitment that, if something bad occurs, the business on the other end of the policy will make good in one way or another in a timely manner. If you get injured while working, your company's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.

But since figuring out who is financially accountable for services or repairs is sometimes a time-consuming affair – and time spent waiting in some cases compounds the damage to the victim – insurance companies in many cases decide to pay up front and assign blame afterward. They then need a mechanism to recoup the costs if, ultimately, they weren't actually in charge of the payout.

Let's Look at an Example

Your electric outlet catches fire and causes $10,000 in home damages. Luckily, you have property insurance and it pays for the repairs. However, the assessor assigned to your case finds out that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him to blame for the damages. The home has already been repaired in the name of expediency, but your insurance agency is out ten grand. What does the agency do next?

How Does Subrogation Work?

This is where subrogation comes in. It is the way 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. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is given some of your rights in exchange 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 Me?

For one thing, 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 – to the tune of $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its losses by increasing your premiums. On the other hand, if it has a knowledgeable legal team and goes after them enthusiastically, it is acting both in its own interests and in yours. 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 to blame), you'll typically get half your deductible back, depending on the laws in your state.

Moreover, if the total expense 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 family law lawyer Portland OR, pursue subrogation and succeeds, it will recover your costs as well as its own.

All insurance companies are not created equal. When comparing, it's worth contrasting the records of competing companies to determine if they pursue winnable subrogation claims; if they do so quickly; if they keep their customers updated as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, on the other hand, an insurer has a reputation of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, even attractive rates won't outweigh the eventual headache.

The Things You Need to Know About Subrogation

Subrogation is a term that's well-known in insurance and legal circles but rarely by the people who employ them. Rather than leave it to the professionals, it is in your self-interest to understand the steps of the process. The more you know about it, the more likely it is that an insurance lawsuit will work out favorably.

Every insurance policy you have is a promise that, if something bad happens to you, the insurer of the policy will make good without unreasonable delay. If your home is burglarized, for instance, your property insurance agrees to remunerate you or enable the repairs, subject to state property damage laws.

But since ascertaining who is financially accountable for services or repairs is usually a confusing affair – and time spent waiting in some cases increases the damage to the policyholder – insurance firms usually decide to pay up front and assign blame afterward. They then need a way to regain the costs if, ultimately, they weren't responsible for the payout.

For Example

You rush into the Instacare with a gouged finger. You give the nurse your medical insurance card and she takes down your policy details. You get taken care of and your insurance company gets an invoice for the services. But on the following morning, when you get to your workplace – where the injury occurred – your boss hands you workers compensation paperwork to fill out. Your workers comp policy is in fact responsible for the payout, not your medical insurance policy. The latter has a right to recover its costs somehow.

How Subrogation Works

This is where subrogation comes in. It is the way 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 to your self or property. But under subrogation law, your insurance company is extended some of your rights in exchange 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.

Why Should I Care?

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 have a stake in the outcome as well – namely, $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to get back its costs by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them aggressively, it is acting both in its own interests and in yours. If all of the money 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 accountable), you'll typically get half your deductible back, based on the laws in most states.

Additionally, if the total price 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 family law east olympia wa, successfully press a subrogation case, it will recover your expenses in addition to its own.

All insurance companies are not the same. When shopping around, it's worth contrasting the records of competing companies to evaluate if they pursue winnable subrogation claims; if they do so without delay; if they keep their clients posted as the case continues; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, instead, an insurance company has a record of honoring claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.