Subrogation is a term that's understood among legal and insurance companies but often not by the people they represent. Rather than leave it to the professionals, it is to your advantage to understand an overview of how it works. The more knowledgeable you are, the more likely it is that relevant proceedings will work out in your favor.

Any insurance policy you own is a promise that, if something bad occurs, the insurer of the policy will make restitutions in a timely manner. If your vehicle is in a fender-bender, insurance adjusters (and the judicial system, when necessary) decide who was at fault and that party's insurance covers the damages.

But since ascertaining who is financially accountable for services or repairs is sometimes a confusing affair – and time spent waiting sometimes adds to the damage to the policyholder – insurance companies often decide to pay up front and figure out the blame afterward. They then need a way to regain the costs if, once the situation is fully assessed, they weren't actually responsible for the payout.

Can You Give an Example?

You are in a traffic-light accident. Another car crashed into yours. The police show up to assess the situation, you exchange insurance information, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later police tell the insurance companies that the other driver was at fault and his insurance policy should have paid for the repair of your vehicle. How does your insurance company get its funds back?

How Subrogation Works

This is where subrogation comes in. It is the method that an insurance company uses to claim payment 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. Ordinarily, only you can sue for damages to your self or property. But under subrogation law, your insurer is extended 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 Do I Need to Know This?

For a start, if your insurance policy stipulated a deductible, it wasn't just your insurer that 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 choose to get back its costs by boosting your premiums. On the other hand, if it knows which cases it is owed and pursues those cases aggressively, it is doing you a favor as well as itself. 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 accountable), you'll typically get half your deductible back, depending on the laws in your state.

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

All insurers are not the same. When comparing, it's worth examining the reputations of competing firms to find out if they pursue legitimate subrogation claims; if they do so in a reasonable amount of time; if they keep their accountholders updated as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, instead, an insurer has a record of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, even attractive rates won't outweigh the eventual headache.