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Subrogation is a concept that's well-known in legal and insurance circles but often not by the people they represent. Even if you've never heard the word before, it is in your self-interest to comprehend the nuances of how it works. The more knowledgeable you are about it, the more likely an insurance lawsuit will work out favorably.

Every insurance policy you have is a commitment that, if something bad occurs, the insurer of the policy will make restitutions in one way or another in a timely manner. If a blizzard damages your property, for example, your property insurance steps in to repay you or enable the repairs, subject to state property damage laws.

But since determining who is financially accountable for services or repairs is sometimes a tedious, lengthy affair – and delay often adds to the damage to the policyholder – insurance companies usually decide to pay up front and assign blame after the fact. They then need a way to regain the costs if, when there is time to look at all the facts, they weren't actually responsible for the payout.

Let's Look at an Example

You go to the doctor's office with a gouged finger. You give the receptionist your medical insurance card and she writes down your plan information. You get stitched up and your insurer gets an invoice for the medical care. But on the following afternoon, when you clock in at 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 expenses, not your medical insurance company. It has a vested interest in getting that money back somehow.

How Subrogation Works

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 companies 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 insurer is considered to have some of your rights in exchange for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.

Why Does This Matter to Me?

For starters, if your insurance policy stipulated a deductible, your insurer wasn't the only one who 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 timid on any subrogation case it might not win, it might choose to recover its losses by upping your premiums. On the other hand, if it knows which cases it is owed and goes after those cases efficiently, it is acting both in its own interests and in yours. 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 one-half responsible), you'll typically get $500 back, based on the laws in most states.

Furthermore, if the total loss 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 personal injury law firm Marietta, GA, pursue subrogation and succeeds, it will recover your losses as well as its own.

All insurers are not created equal. When comparing, it's worth comparing the reputations of competing agencies to evaluate whether they pursue legitimate subrogation claims; if they do so without delay; if they keep their clients apprised as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your money 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 covering its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.