Subrogation is a term that's well-known among insurance and legal companies but often not by the customers who employ them. Rather than leave it to the professionals, it is in your self-interest to know the nuances of how it works. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance company.

Any insurance policy you hold is an assurance that, if something bad occurs, the business that covers the policy will make restitutions in one way or another in a timely manner. If your home is broken into, for instance, your property insurance agrees to compensate you or facilitate the repairs, subject to state property damage laws.

But since determining who is financially accountable for services or repairs is sometimes a confusing affair – and time spent waiting sometimes adds to the damage to the victim – insurance companies often opt to pay up front and assign blame later. They then need a path to get back the costs if, when there is time to look at all the facts, they weren't actually in charge of the payout.

Can You Give an Example?

Your bedroom catches fire and causes $10,000 in home damages. Fortunately, you have property insurance and it pays out your claim in full. However, in its investigation it finds out that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him to blame for the loss. You already have your money, but your insurance company is out $10,000. What does the company do next?

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 companies 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 insurer is considered to have some of your rights 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 Do I Need to Know This?

For starters, 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 – namely, $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to get back its expenses by upping your premiums. On the other hand, if it knows which cases it is owed and goes after them aggressively, it is doing you a favor as well as itself. If all $10,000 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.

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 mableton personal injury lawyer, pursue subrogation and wins, it will recover your expenses in addition to its own.

All insurers are not the same. When comparing, it's worth looking up the reputations of competing firms to evaluate whether they pursue winnable subrogation claims; if they do so fast; if they keep their policyholders informed as the case continues; 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 insurer has a reputation of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, even attractive rates won't outweigh the eventual headache.