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Subrogation is a concept that's well-known in insurance and legal circles but often not by the customers they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your benefit to comprehend an overview of the process. The more knowledgeable you are about it, the more likely it is that relevant proceedings will work out favorably.

Any insurance policy you have is an assurance that, if something bad occurs, the insurer of the policy will make good in one way or another in a timely manner. If your vehicle is hit, insurance adjusters (and police, when necessary) determine who was to blame and that person's insurance pays out.

But since ascertaining who is financially accountable for services or repairs is regularly a confusing affair – and delay often compounds the damage to the victim – insurance companies usually decide to pay up front and figure out the blame afterward. They then need a method to recoup the costs if, when there is time to look at all the facts, they weren't responsible for the expense.

For Example

You head to the doctor's office with a sliced-open finger. You give the receptionist your health insurance card and she writes down your coverage details. You get stitches and your insurance company gets a bill for the tab. But on the following day, when you arrive at work – where the injury occurred – your boss hands you workers compensation forms to file. Your workers comp policy is in fact responsible for the bill, not your health insurance policy. The latter has an interest in recovering its money somehow.

How Does Subrogation Work?

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. Ordinarily, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is extended some of your rights for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.

Why Does This Matter to Me?

For a start, if you have 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 – to be precise, $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to get back its costs by upping your premiums and call it a day. On the other hand, if it has a capable legal team and pursues those cases aggressively, it is doing you a favor as well as itself. If all is recovered, you will get your full $1,000 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 your state laws.

In addition, 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 spendy. If your insurance company or its property damage lawyers, such as family law lawyer Portland OR, successfully press a subrogation case, it will recover your expenses in addition to its own.

All insurers are not created equal. When comparing, it's worth weighing the reputations of competing companies to find out whether they pursue winnable subrogation claims; if they resolve those claims quickly; if they keep their policyholders posted as the case continues; and if they then process successfully won reimbursements right away 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 covering its bottom line by raising your premiums, you'll feel the sting later.