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Subrogation is a concept that's well-known among insurance and legal firms but often not by the people they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your benefit to understand the nuances of how it works. The more information you have, the better decisions you can make about your insurance policy.

Every insurance policy you have is an assurance that, if something bad happens to you, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If you get an injury on the job, for instance, your company's workers compensation agrees to pay 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 often a tedious, lengthy affair – and time spent waiting often compounds the damage to the victim – insurance firms often decide to pay up front and figure out the blame afterward. They then need a method to get back the costs if, when all the facts are laid out, they weren't actually in charge of the expense.

Let's Look at an Example

You go to the doctor's office with a gouged finger. You give the nurse your medical insurance card and he takes down your coverage details. You get stitched up and your insurer gets an invoice for the medical care. But the next afternoon, when you get to your workplace – where the accident occurred – your boss hands you workers compensation paperwork to fill out. Your employer's workers comp policy is actually responsible for the bill, not your medical insurance company. It has a vested interest in getting that money back in some way.

How Does Subrogation Work?

This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. Some insurance firms 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 insurer is considered to have 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.

Why Should I Care?

For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurer 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 insurance company is lax about bringing subrogation cases to court, it might opt to get back its expenses by raising your premiums. On the other hand, if it has a proficient legal team and goes after those cases aggressively, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent to blame), you'll typically get $500 back, based on the laws in most states.

Additionally, 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 business law springville ut, pursue subrogation and wins, it will recover your expenses as well as its own.

All insurance agencies are not the same. When comparing, it's worth looking at the records of competing firms to determine if they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their accountholders 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, instead, an insurance firm has a reputation of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you'll feel the sting later.