Subrogation is a concept that's understood among legal and insurance companies but rarely by the customers they represent. Rather than leave it to the professionals, it would be to your advantage to know the steps of how it works. The more information you have about it, the better decisions you can make about your insurance company.

Every insurance policy you own is a commitment that, if something bad happens to you, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If you get injured while working, for example, your employer's workers compensation insurance pays out for medical services. Employment lawyers handle the details; you just get fixed up.

But since ascertaining who is financially accountable for services or repairs is typically a confusing affair – and time spent waiting often increases the damage to the policyholder – insurance firms in many cases opt to pay up front and assign blame after the fact. They then need a path to recoup the costs if, ultimately, they weren't actually responsible for the payout.

For Example

Your stove catches fire and causes $10,000 in home damages. Fortunately, you have property insurance and it pays out your claim in full. However, the assessor assigned to your case finds out that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him liable for the loss. You already have your money, but your insurance firm is out all that money. What does the firm do next?

How Subrogation Works

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 insurance company is considered to have some of your rights for making good on 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 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 – namely, $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to get back its expenses by raising your premiums. On the other hand, if it has a capable legal team and pursues them aggressively, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half at fault), you'll typically get half your deductible back, based on the laws in most states.

Moreover, if the total cost of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as family law attorney 23294, successfully press a subrogation case, it will recover your losses in addition to its own.

All insurance companies are not the same. When comparing, it's worth weighing the reputations of competing agencies to evaluate whether they pursue valid subrogation claims; if they do so without dragging their feet; if they keep their customers updated as the case goes on; and if they then process successfully won reimbursements immediately 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 paying out claims that aren't its responsibility and then protecting its income by raising your premiums, you'll feel the sting later.