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Subrogation is a term that's understood in insurance and legal circles but sometimes not by the people they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is to your advantage to comprehend an overview of how it works. The more information you have, the better decisions you can make about your insurance policy.

Any insurance policy you have is an assurance that, if something bad happens to you, the firm that covers 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 police, when necessary) determine who was to blame and that party's insurance covers the damages.

But since determining who is financially responsible for services or repairs is usually a tedious, lengthy affair – and delay in some cases adds to the damage to the victim – insurance companies usually opt to pay up front and assign blame afterward. They then need a way to get back the costs if, ultimately, they weren't in charge of the payout.

Can You Give an Example?

You are in a highway accident. Another car ran into yours. Police are called, you exchange insurance information, and you go on your way. You have comprehensive insurance and file a repair claim. Later it's determined that the other driver was entirely to blame and his insurance policy should have paid for the repair of your auto. How does your insurance company get its money back?

How Does Subrogation Work?

This is where subrogation comes in. It is the way that an insurance company uses to claim payment 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. Under ordinary circumstances, only you can sue for damages done 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 Should I Care?

For a start, 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 insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recoup its costs by boosting your premiums. On the other hand, if it has a capable legal team and goes after them aggressively, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half accountable), you'll typically get $500 back, depending on your state laws.

In addition, if the total loss of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as auto accident lawyer Lithia springs GA, successfully press a subrogation case, it will recover your losses in addition to its own.

All insurance agencies are not created equal. When comparing, it's worth examining the records of competing agencies to determine if they pursue winnable subrogation claims; if they do so without delay; if they keep their accountholders advised as the case goes on; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, on the other hand, an insurer has a record of honoring claims that aren't its responsibility and then covering its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.