Subrogation is a term that's understood in insurance and legal circles but rarely by the customers who employ them. Rather than leave it to the professionals, it would be in your benefit to know the nuances of how it works. The more you know about it, the better decisions you can make with regard to your insurance policy.

Any insurance policy you hold 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 agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.

But since determining who is financially accountable for services or repairs is often a confusing affair – and delay sometimes increases the damage to the policyholder – insurance companies in many cases opt to pay up front and assign blame later. They then need a means to recover the costs if, ultimately, they weren't in charge of the expense.

Can You Give an Example?

You head to the Instacare with a sliced-open finger. You give the nurse your medical insurance card and she takes down your plan information. You get stitches and your insurer is billed for the tab. But on the following morning, when you clock in at your place of employment – where the accident occurred – you are given workers compensation forms to fill out. Your workers comp policy is in fact responsible for the hospital visit, not your medical 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 reimbursement 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. Normally, only you can sue for damages done 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 that was originally due to you, because it has covered the amount already.

Why Do I Need to Know This?

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 lax about bringing subrogation cases to court, it might opt to recoup its expenses by boosting your premiums and call it a day. On the other hand, if it has a capable legal team and goes after those cases 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 50 percent accountable), you'll typically get half your deductible back, based on the laws in most states.

Additionally, if the total cost of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as car accident attorney Austell GA, successfully press a subrogation case, it will recover your expenses in addition to its own.

All insurance companies are not created equal. When shopping around, it's worth scrutinizing the records of competing companies to evaluate if they pursue legitimate subrogation claims; if they do so in a reasonable amount of time; if they keep their clients updated as the case proceeds; 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, instead, an insurance firm has a reputation of honoring claims that aren't its responsibility and then covering its bottom line by raising your premiums, you should keep looking.