Subrogation is an idea that's well-known among insurance and legal professionals but often not by the policyholders 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 comprehend an overview of how it works. The more knowledgeable you are about it, the more likely it is that relevant proceedings will work out favorably.

Every insurance policy you hold is an assurance that, if something bad happens to you, the business on the other end of the policy will make restitutions in one way or another in a timely manner. If you get an injury while you're on the clock, your company's workers compensation 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 sometimes a heavily involved affair – and delay often adds to the damage to the victim – insurance firms often opt to pay up front and figure out the blame later. They then need a means to regain the costs if, when there is time to look at all the facts, they weren't responsible for the expense.

For Example

You rush into the Instacare with a sliced-open finger. You give the nurse your health insurance card and he records your coverage information. You get stitched up and your insurer is billed for the medical care. But on the following morning, when you arrive at your workplace – where the injury occurred – your boss hands you workers compensation paperwork to turn in. Your company's workers comp policy is actually responsible for the bill, not your health insurance. The latter has an interest in recovering its costs in some way.

How Does Subrogation Work?

This is where subrogation comes in. It is the way that an insurance company uses to claim payment 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 self or property. But under subrogation law, your insurer 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 Individuals?

For one thing, if your insurance policy stipulated a deductible, your insurer wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to the tune of $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recover its costs by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is doing you a favor as well as itself. If all of the money is recovered, you will get your full $1,000 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 cost 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 accident injury lawyers Smyrna GA, pursue subrogation and succeeds, it will recover your expenses as well as its own.

All insurers are not created equal. When comparing, it's worth examining the reputations of competing agencies to find out whether they pursue winnable 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 quickly so that you can get your funding back and move on with your life. If, instead, an insurance agency has a reputation of paying out claims that aren't its responsibility and then protecting its profit margin by raising your premiums, you should keep looking.