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Subrogation is a concept that's understood in insurance and legal circles but rarely by the customers they represent. Rather than leave it to the professionals, it is in your self-interest to know the nuances of how it works. The more you know, the more likely relevant proceedings will work out favorably.

An insurance policy you hold is a commitment that, if something bad occurs, the company that covers the policy will make restitutions in a timely manner. If you get injured at work, for example, your company's workers compensation pays out for medical services. Employment lawyers handle the details; you just get fixed up.

But since determining who is financially responsible for services or repairs is usually a confusing affair – and time spent waiting often increases the damage to the policyholder – insurance companies usually decide to pay up front and assign blame after the fact. They then need a mechanism to recover the costs if, ultimately, they weren't actually in charge of the expense.

For Example

You are in an auto accident. Another car ran into yours. Police are called, you exchange insurance information, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later police tell the insurance companies that the other driver was entirely to blame and her insurance policy should have paid for the repair of your auto. How does your insurance company get its money back?

How Subrogation Works

This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement after it has paid for something that should have been paid by some other entity. 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. Usually, only you can sue for damages to your self or property. But under subrogation law, your insurance company is considered to have 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 Do I Need to Know This?

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 lost some money too – to the tune of $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to recoup its losses by increasing your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and pursues those cases efficiently, 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 to blame), you'll typically get $500 back, depending on the laws in your state.

Furthermore, 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 copyright registration 77092, successfully press a subrogation case, it will recover your costs in addition to its own.

All insurers are not created equal. When comparing, it's worth looking at the records of competing companies to determine if they pursue valid subrogation claims; if they do so with some expediency; if they keep their policyholders apprised as the case goes on; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, instead, an insurance agency has a record of honoring claims that aren't its responsibility and then covering its income by raising your premiums, you should keep looking.