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Subrogation is a term that's understood among legal and insurance companies but often not by the customers who employ them. Even if you've never heard the word before, it is to your advantage to comprehend the nuances of the process. The more knowledgeable you are about it, the more likely an insurance lawsuit will work out in your favor.

Any insurance policy you own is an assurance that, if something bad happens to you, the insurer of the policy will make good in a timely fashion. If you get injured at work, your company's workers compensation insurance agrees to pay 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 sometimes a confusing affair – and delay often compounds the damage to the policyholder – insurance firms in many cases opt to pay up front and figure out the blame after the fact. They then need a way to recover the costs if, ultimately, they weren't actually responsible for the payout.

Let's Look at an Example

You arrive at the emergency room with a deeply cut finger. You give the nurse your health insurance card and she writes down your coverage information. You get stitches and your insurer gets a bill for the services. But the next afternoon, when you get to your workplace – where the accident occurred – you are given workers compensation forms to fill out. Your workers comp policy is in fact responsible for the payout, not your health insurance company. It has a vested interest in getting that money back in some way.

How Subrogation Works

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 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 insurer is considered to have some of your rights 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 starters, if you have a deductible, your insurer wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to recover its costs by increasing your premiums. On the other hand, if it has a capable legal team and pursues them enthusiastically, it is doing you a favor as well as itself. If all 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 responsible), you'll typically get $500 back, based on the laws in most states.

Moreover, if the total cost 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 Criminal Defense Springville UT, successfully press a subrogation case, it will recover your expenses in addition to its own.

All insurers are not the same. When shopping around, it's worth scrutinizing the records of competing companies to find out whether they pursue winnable subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their policyholders posted as the case continues; and if they then process successfully won reimbursements right away so that you can get your losses back and move on with your life. If, on the other hand, an insurance company has a reputation of honoring claims that aren't its responsibility and then covering its profitability by raising your premiums, you'll feel the sting later.