Subrogation is an idea that's understood among insurance and legal professionals but often not by the customers who employ them. Even if you've never heard the word before, it is in your self-interest to comprehend an overview of the process. 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 without unreasonable delay. If your house is broken into, for example, your property insurance agrees to pay you or facilitate the repairs, subject to state property damage laws.

But since figuring out who is financially responsible for services or repairs is regularly a confusing affair – and delay often increases the damage to the policyholder – insurance firms usually decide to pay up front and assign blame later. They then need a path to get back the costs if, when there is time to look at all the facts, they weren't responsible for the expense.

Let's Look at an Example

You are in a car 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 police tell the insurance companies that the other driver was entirely at fault and his insurance should have paid for the repair of your vehicle. How does your insurance company get its funds back?

How Does Subrogation Work?

This is where subrogation comes in. It is the way that an insurance company uses to claim payment 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. Normally, only you can sue for damages done 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 Does This Matter to Me?

For one thing, if you have a deductible, it wasn't just your insurance company who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to get back its losses by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them efficiently, it is acting both in its own interests and in yours. If all of the money 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 to blame), you'll typically get half your deductible back, based on the laws in most states.

Furthermore, if the total price 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 attorneys that specialize in auto accidents Mableton GA, pursue subrogation and succeeds, it will recover your losses in addition to its own.

All insurance companies are not created equal. When comparing, it's worth measuring the reputations of competing companies to find out whether they pursue valid subrogation claims; if they do so fast; if they keep their policyholders informed as the case goes on; 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 insurer has a reputation of honoring claims that aren't its responsibility and then covering its profitability by raising your premiums, you should keep looking.