Subrogation is a concept that's understood among insurance and legal professionals but rarely by the people who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your self-interest to know the nuances of the process. The more information you have, the more likely relevant proceedings will work out in your favor.

Any insurance policy you own is a commitment that, if something bad happens to you, the firm on the other end of the policy will make good in one way or another without unreasonable delay. If your property burns down, for instance, your property insurance steps in to compensate you or enable the repairs, subject to state property damage laws.

But since determining who is financially accountable for services or repairs is often a tedious, lengthy affair – and delay sometimes increases the damage to the policyholder – insurance companies usually opt to pay up front and assign blame later. They then need a path to get back the costs if, when all the facts are laid out, they weren't actually responsible for the expense.

Let's Look at an Example

You are in an auto accident. Another car ran into yours. The police show up to assess the situation, 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 her insurance should have paid for the repair of your car. How does your company get its money back?

How Does Subrogation Work?

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. Usually, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is given some of your rights in exchange for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.

How Does This Affect Me?

For a start, if you have a deductible, your insurance company wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to be precise, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its losses by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases aggressively, it is acting both in its own interests and in yours. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent to blame), you'll typically get $500 back, based on the laws in most states.

In addition, if the total expense of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as discrimination attorney 98466, successfully press a subrogation case, it will recover your costs in addition to its own.

All insurance agencies are not the same. When comparing, it's worth measuring the records of competing firms to find out if they pursue legitimate subrogation claims; if they do so quickly; if they keep their policyholders informed as the case continues; and if they then process successfully won reimbursements right away so that you can get your losses back and move on with your life. If, on the other hand, an insurance company has a record of honoring claims that aren't its responsibility and then safeguarding its income by raising your premiums, you should keep looking.