Subrogation is an idea that's understood among insurance and legal professionals but rarely by the people they represent. Rather than leave it to the professionals, it would be to your advantage to understand the nuances of how it works. The more information you have, the better decisions you can make with regard to your insurance policy.

Any insurance policy you own is a promise that, if something bad occurs, the firm that insures the policy will make good in one way or another without unreasonable delay. If your home suffers fire damage, your property insurance steps in to compensate you or facilitate the repairs, subject to state property damage laws.

But since figuring out who is financially accountable for services or repairs is typically a confusing affair – and time spent waiting often adds to the damage to the policyholder – insurance companies usually decide to pay up front and figure out the blame after the fact. They then need a path to recoup the costs if, when there is time to look at all the facts, they weren't actually in charge of the payout.

For Example

You are in a vehicle accident. Another car ran into yours. Police are called, you exchange insurance information, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later police tell the insurance companies that the other driver was to blame and his insurance policy should have paid for the repair of your vehicle. How does your insurance company get its money back?

How Does Subrogation Work?

This is where subrogation comes in. It is the way that an insurance company uses to claim payment 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 making good on 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 starters, if you have a deductible, your insurer wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to recover its losses by increasing your premiums. On the other hand, if it has a proficient legal team and goes after those cases enthusiastically, it is acting both in its own interests and in yours. If all ten grand 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 at fault), you'll typically get $500 back, depending on the laws in your state.

Furthermore, if the total price 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 business law spanish fork ut, pursue subrogation and succeeds, it will recover your expenses in addition to its own.

All insurance agencies are not the same. When shopping around, it's worth looking up the records of competing agencies to evaluate whether they pursue winnable subrogation claims; if they resolve those claims without delay; if they keep their clients posted 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 reputation of honoring claims that aren't its responsibility and then protecting its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.