Subrogation is an idea that's well-known in insurance and legal circles but often not by the customers they represent. Rather than leave it to the professionals, it is in your self-interest to understand an overview of the process. The more information you have, the better decisions you can make about your insurance company.

Any insurance policy you have is a commitment that, if something bad occurs, the insurer of the policy will make restitutions in one way or another in a timely manner. If your vehicle is hit, insurance adjusters (and police, when necessary) decide who was to blame and that person's insurance covers the damages.

But since determining who is financially accountable for services or repairs is typically a tedious, lengthy affair – and delay sometimes adds to the damage to the policyholder – insurance companies usually decide to pay up front and figure out the blame later. They then need a means to recover the costs if, when there is time to look at all the facts, they weren't actually in charge of the payout.

Let's Look at an Example

You are in a highway accident. Another car collided with yours. Police are called, 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 his insurance policy should have paid for the repair of your auto. How does your company get its funds back?

How Subrogation Works

This is where subrogation comes in. It is the process 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. Ordinarily, 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 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.

Why Should I Care?

For a start, if your insurance policy stipulated a deductible, it wasn't just your insurer 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 insurer is lax about bringing subrogation cases to court, it might choose to get back its losses by increasing your premiums and call it a day. On the other hand, if it has a proficient legal team and goes after them efficiently, it is acting both in its own interests and in yours. 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 one-half at fault), 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 could be in for a stiff bill. If your insurance company or its property damage lawyers, such as Personal injury attorney near me Tacoma WA, pursue subrogation and succeeds, it will recover your losses as well as its own.

All insurers are not created equal. When comparing, it's worth looking up the reputations of competing companies to determine if they pursue valid subrogation claims; if they do so without dragging their feet; if they keep their accountholders advised as the case proceeds; 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, instead, an insurance firm has a record of paying out claims that aren't its responsibility and then covering its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.