Subrogation is an idea that's understood among insurance and legal companies but often not by the people they represent. Rather than leave it to the professionals, it is in your benefit to know the nuances of the process. The more you know, the better decisions you can make about your insurance company.

Any insurance policy you own is a commitment that, if something bad occurs, the company that insures the policy will make restitutions in a timely manner. If your vehicle is hit, insurance adjusters (and the courts, when necessary) determine who was to blame and that party's insurance pays out.

But since ascertaining who is financially accountable for services or repairs is often a time-consuming affair – and time spent waiting in some cases compounds the damage to the victim – insurance firms usually decide to pay up front and assign blame later. They then need a way to get back the costs if, when there is time to look at all the facts, they weren't in charge of the expense.

For Example

Your stove catches fire and causes $10,000 in house damages. Fortunately, you have property insurance and it takes care of the repair expenses. However, the assessor assigned to your case finds out that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him accountable for the loss. You already have your money, but your insurance agency is out all that money. What does the agency do next?

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 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 done to your person or property. But under subrogation law, your insurance company is considered to have 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.

Why Does This Matter to Me?

For one thing, 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 – to be precise, $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to get back its costs by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues 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 deductible back. If it recovers half (for instance, in a case where you are found 50 percent culpable), you'll typically get half your deductible back, based on the laws in most states.

Moreover, if the total loss 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 personal injury attorney Marietta, GA, successfully press a subrogation case, it will recover your costs in addition to its own.

All insurers are not created equal. When comparing, it's worth researching the records of competing firms to find out whether they pursue legitimate subrogation claims; if they do so quickly; if they keep their clients posted as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, on the other hand, an insurer has a reputation of paying out claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.