An insurance policy you own is a commitment that, if something bad happens to you, the insurer of the policy will make restitutions in a timely fashion. If you get injured at work, your employer's workers compensation pays out for medical services. Employment lawyers handle the details; you just get fixed up.
But since determining who is financially accountable for services or repairs is typically a tedious, lengthy affair – and delay in some cases compounds the damage to the policyholder – insurance companies often opt to pay up front and assign blame afterward. They then need a way to regain the costs if, once the situation is fully assessed, they weren't in charge of the expense.
Let's Look at an Example
You arrive at the hospital with a deeply cut finger. You hand the receptionist your health insurance card and he takes down your policy information. You get taken care of and your insurance company gets a bill for the medical care. But the next afternoon, when you clock in at work – where the accident occurred – you are given workers compensation forms to file. Your company's workers comp policy is actually responsible for the costs, not your health insurance company. The latter has an interest in recovering its costs somehow.
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. Ordinarily, only you can sue for damages done to your person 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 originally due to you, because it has covered the amount already.
How Does This Affect Me?
For starters, if you have a deductible, it wasn't just your insurance company who 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 timid on any subrogation case it might not win, it might choose to get back its losses by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them efficiently, 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 50 percent accountable), you'll typically get half your deductible back, depending on the laws in your state.
Furthermore, if the total cost of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as criminal law Hillsboro OR, successfully press a subrogation case, it will recover your costs as well as its own.
All insurers are not the same. When shopping around, it's worth looking up the records of competing companies to determine whether they pursue valid subrogation claims; if they do so in a reasonable amount of time; if they keep their customers updated as the case continues; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, instead, an insurance firm has a reputation of honoring claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you'll feel the sting later.
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