Subrogation is an idea that's well-known among legal and insurance professionals but rarely by the customers who hire them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your benefit to comprehend an overview of how it works. The more knowledgeable you are, the more likely it is that relevant proceedings will work out in your favor.

Every insurance policy you hold is a promise that, if something bad happens to you, the insurer of the policy will make restitutions without unreasonable delay. If your vehicle is hit, insurance adjusters (and the courts, when necessary) decide who was to blame and that person's insurance covers the damages.

But since ascertaining who is financially accountable for services or repairs is often a tedious, lengthy affair – and delay sometimes adds to the damage to the policyholder – insurance companies often opt to pay up front and figure out the blame after the fact. They then need a means to regain the costs if, when all the facts are laid out, they weren't actually responsible for the payout.

For Example

You head to the doctor's office with a gouged finger. You hand the receptionist your health insurance card and he records your policy information. You get stitches and your insurer is billed for the expenses. But the next morning, when you clock in at your place of employment – where the accident happened – you are given workers compensation forms to fill out. Your employer's workers comp policy is in fact responsible for the payout, not your health insurance policy. It has a vested interest in getting that money back somehow.

How Does Subrogation Work?

This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement after it has paid for something that should have been paid by some other entity. 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 to your self 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 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 insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its losses by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them aggressively, it is doing you a favor as well as itself. If all 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 half your deductible back, based on the laws in most states.

Furthermore, if the total price of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as family law attorney Tumwater, WA, successfully press a subrogation case, it will recover your costs as well as its own.

All insurance companies are not created equal. When shopping around, it's worth comparing the records of competing agencies to evaluate whether they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their policyholders advised as the case proceeds; and if they then process successfully won reimbursements immediately 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 protecting its profit margin by raising your premiums, you'll feel the sting later.