Subrogation is an idea that's well-known in insurance and legal circles but rarely by the policyholders who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your self-interest to know the steps of how it works. The more knowledgeable you are about it, the more likely relevant proceedings will work out favorably.

Every insurance policy you own is a promise that, if something bad occurs, the insurer of the policy will make good in one way or another in a timely manner. If you get hurt while you're on the clock, your employer's workers compensation pays out for medical services. Employment lawyers handle the details; you just get fixed up.

But since ascertaining who is financially accountable for services or repairs is typically a tedious, lengthy affair – and time spent waiting sometimes compounds the damage to the policyholder – insurance firms usually opt to pay up front and assign blame after the fact. They then need a mechanism to recover the costs if, once the situation is fully assessed, they weren't actually responsible for the payout.

For Example

Your stove catches fire and causes $10,000 in house damages. Happily, you have property insurance and it takes care of the repair expenses. However, the assessor assigned to your case discovers that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him liable for the damages. The house has already been fixed up in the name of expediency, but your insurance firm is out $10,000. What does the firm do next?

How Does Subrogation Work?

This is where subrogation comes in. It is the process that an insurance company uses to claim payment 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. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurer is given 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.

How Does This Affect Individuals?

For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurer 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 opt to recoup its losses by upping your premiums and call it a day. On the other hand, if it has a capable legal team and pursues those cases efficiently, it is doing you a favor as well as itself. If all ten grand 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 culpable), you'll typically get $500 back, based on the laws in most states.

Additionally, if the total expense 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 auto accident lithia springs ga, successfully press a subrogation case, it will recover your expenses in addition to its own.

All insurance agencies are not created equal. When shopping around, it's worth looking up the records of competing agencies to find out whether they pursue winnable subrogation claims; if they do so in a reasonable amount of time; if they keep their accountholders updated as the case continues; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, on the other hand, an insurance agency has a record of paying out claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you should keep looking.