Subrogation is a concept that's well-known among legal and insurance companies but sometimes not by the customers who employ them. Even if you've never heard the word before, it is in your self-interest to understand the nuances of how it works. The more information you have about it, the better decisions you can make with regard to your insurance policy.

Any insurance policy you hold is a commitment that, if something bad happens to you, the insurer of the policy will make restitutions in a timely manner. If you get an injury while working, your company's workers compensation insurance pays out for medical services. Employment lawyers handle the details; you just get fixed up.

But since figuring out who is financially responsible for services or repairs is often a confusing affair – and delay in some cases increases the damage to the policyholder – insurance firms in many cases opt to pay up front and figure out the blame after the fact. They then need a way to recover the costs if, when all the facts are laid out, they weren't responsible for the payout.

Let's Look at an Example

You are in a vehicle accident. Another car ran into yours. The police show up to assess the situation, you exchange insurance details, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later it's determined that the other driver was to blame and her insurance policy 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 method that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. 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. Usually, only you can sue for damages to your person or property. But under subrogation law, your insurer is given some of your rights in exchange 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 Should I Care?

For a start, if your insurance policy stipulated a deductible, your insurer wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to recover its losses by upping your premiums. On the other hand, if it has a proficient legal team and pursues those cases efficiently, it is doing you a favor as well as itself. If all 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 culpable), you'll typically get $500 back, depending on your state laws.

Furthermore, if the total cost 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 attorneys that specialize in auto accidents Marietta GA, successfully press a subrogation case, it will recover your losses in addition to its own.

All insurers are not created equal. When comparing, it's worth examining the records of competing firms to evaluate if they pursue legitimate subrogation claims; if they resolve those claims with some expediency; if they keep their clients apprised as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, instead, an insurance firm has a record of honoring claims that aren't its responsibility and then covering its profitability by raising your premiums, you should keep looking.