Subrogation is a term that's well-known among insurance and legal firms but rarely by the policyholders they represent. Even if it sounds complicated, it would be in your benefit to know the nuances of the process. The more you know about it, the better decisions you can make with regard to your insurance company.

Any insurance policy you own is a commitment that, if something bad occurs, the business that covers the policy will make restitutions in a timely fashion. If you get injured on the job, your company's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.

But since determining who is financially accountable for services or repairs is usually a time-consuming affair – and delay often adds to the damage to the victim – insurance firms in many cases decide to pay up front and assign blame later. They then need a mechanism to regain the costs if, in the end, they weren't actually in charge of the payout.

Can You Give an Example?

You rush into the hospital with a sliced-open finger. You give the nurse your medical insurance card and she takes down your policy details. You get taken care of and your insurance company gets a bill for the medical care. But on the following day, when you arrive at your workplace – where the injury occurred – you are given workers compensation forms to turn in. Your employer's workers comp policy is in fact responsible for the hospital trip, not your medical insurance company. It has a vested interest in getting that money back somehow.

How Subrogation Works

This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement 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. Normally, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is given some of your rights 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 the Insured?

For a start, if you have a deductible, it wasn't just your insurance company who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to be precise, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, 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 them enthusiastically, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half culpable), you'll typically get $500 back, based on the laws in most states.

Additionally, if the total price of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as criminal defense lawyer Hillsboro OR, pursue subrogation and wins, it will recover your costs in addition to its own.

All insurance agencies are not the same. When shopping around, it's worth researching the records of competing firms to evaluate if they pursue legitimate subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their customers apprised as the case continues; and if they then process successfully won reimbursements immediately so that you can get your money back and move on with your life. If, on the other hand, an insurer has a record of honoring claims that aren't its responsibility and then covering its income by raising your premiums, you'll feel the sting later.