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Subrogation is a concept that's well-known in legal and insurance circles but rarely by the people who employ them. Even if it sounds complicated, it would be to your advantage to understand an overview of how it works. The more you know, the more likely it is that an insurance lawsuit will work out in your favor.

Any insurance policy you own is a promise that, if something bad happens to you, the firm on the other end of the policy will make good in one way or another in a timely manner. If your vehicle is in a fender-bender, insurance adjusters (and the judicial system, when necessary) determine who was to blame and that person's insurance covers the damages.

But since determining who is financially responsible for services or repairs is typically a time-consuming affair – and time spent waiting in some cases increases the damage to the victim – insurance firms often opt to pay up front and assign blame after the fact. They then need a way to get back 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 gouged finger. You hand the receptionist your medical insurance card and she records your policy information. You get stitches and your insurer gets an invoice for the tab. But on the following morning, when you get to your workplace – where the injury happened – your boss hands you workers compensation forms to file. Your company's workers comp policy is actually responsible for the invoice, not your medical insurance. The latter has an interest in recovering its costs somehow.

How Does Subrogation Work?

This is where subrogation comes in. It is the process 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. Normally, only you can sue for damages to your person or property. But under subrogation law, your insurer 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 Policyholders?

For one thing, if you have a deductible, your insurer wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to the tune of $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its costs by upping your premiums. On the other hand, if it knows which cases it is owed and goes after them efficiently, it is doing you a favor as well as itself. If all ten grand 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 culpable), you'll typically get half your deductible back, based on the laws in most states.

Furthermore, if the total price 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 lawyer 83101, 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 looking at the reputations of competing firms to determine whether they pursue legitimate subrogation claims; if they resolve those claims fast; if they keep their clients apprised as the case proceeds; 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 insurer has a record of paying out claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you'll feel the sting later.