Subrogation is a concept that's well-known among legal and insurance companies but often not by the customers who employ them. Even if you've never heard the word before, it would be in your self-interest to comprehend an overview of the process. The more you know, the better decisions you can make with regard to your insurance company.

Any insurance policy you own is an assurance that, if something bad happens to you, the business on the other end of the policy will make restitutions in a timely fashion. If you get hurt at work, your company's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.

But since determining who is financially responsible for services or repairs is sometimes a confusing affair – and delay in some cases adds to the damage to the victim – insurance firms in many cases decide to pay up front and figure out the blame after the fact. They then need a means to recover the costs if, ultimately, they weren't actually in charge of the payout.

Let's Look at an Example

You are in a highway accident. Another car crashed into yours. Police are called, you exchange insurance details, and you go on your way. You have comprehensive insurance and file a repair claim. Later it's determined that the other driver was at fault and her insurance should have paid for the repair of your auto. How does your company get its money back?

How Does Subrogation Work?

This is where subrogation comes in. It is the method 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. Ordinarily, only you can sue for damages to your person 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 that was originally due to you, because it has covered the amount already.

How Does This Affect Me?

For a start, if you have 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 unconcerned with pursuing subrogation even when it is entitled, it might choose 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 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 thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get half your deductible back, based on the laws in most states.

Additionally, if the total price 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 Norcross GA, successfully press a subrogation case, it will recover your costs as well as its own.

All insurance agencies are not the same. When shopping around, it's worth examining the reputations of competing companies to determine whether they pursue legitimate subrogation claims; if they resolve those claims without dragging their feet; if they keep their policyholders apprised as the case goes on; 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, on the other hand, an insurance company has a reputation of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you'll feel the sting later.