Subrogation is a term that's well-known in legal and insurance circles but sometimes not by the people who hire them. Rather than leave it to the professionals, it would be in your self-interest to understand the nuances of how it works. The more knowledgeable you are, the better decisions you can make with regard to your insurance company.

Every insurance policy you hold is an assurance that, if something bad happens to you, the insurer of the policy will make restitutions without unreasonable delay. If you get an injury on the job, your employer'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 responsible for services or repairs is usually a heavily involved affair – and delay in some cases increases the damage to the policyholder – insurance companies often opt to pay up front and assign blame after the fact. They then need a mechanism to recover the costs if, when there is time to look at all the facts, they weren't actually responsible for the payout.

For Example

Your garage catches fire and causes $10,000 in house damages. Luckily, you have property insurance and it pays out your claim in full. However, the assessor assigned to your case finds out that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him liable for the loss. The house has already been repaired in the name of expediency, but your insurance agency is out $10,000. What does the agency do next?

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 self or property. But under subrogation law, your insurance company is extended some of your rights for making good on 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 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 timid on any subrogation case it might not win, it might opt to recover its expenses by boosting your premiums. On the other hand, if it has a knowledgeable legal team and goes after those cases efficiently, it is doing you a favor as well as itself. If all $10,000 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 accountable), you'll typically get $500 back, based on the laws in most states.

In addition, if the total expense of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as criminal law defense attorney Portland OR, pursue subrogation and wins, it will recover your expenses as well as its own.

All insurers are not the same. When comparing, it's worth contrasting the records of competing firms to evaluate whether they pursue legitimate subrogation claims; if they do so without dragging their feet; if they keep their clients apprised as the case continues; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, instead, an insurance company has a reputation of honoring claims that aren't its responsibility and then covering its income by raising your premiums, you should keep looking.