Subrogation is a concept that's well-known in insurance and legal circles but rarely by the people 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 know the steps of the process. The more knowledgeable you are, the better decisions you can make about your insurance policy.

Any insurance policy you have is a commitment that, if something bad occurs, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If you get injured at work, for example, your company's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.

But since figuring out who is financially responsible for services or repairs is regularly a time-consuming affair – and time spent waiting in some cases increases the damage to the policyholder – insurance firms often opt to pay up front and assign blame afterward. They then need a mechanism to recover the costs if, once the situation is fully assessed, they weren't in charge of the payout.

For Example

You are in a highway 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 her insurance policy should have paid for the repair of your car. How does your insurance company get its funds back?

How Subrogation Works

This is where subrogation comes in. It is the way 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. Ordinarily, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is extended some of your rights for making good on 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, your insurance company wasn't the only one 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 insurer is timid on any subrogation case it might not win, it might opt to recoup its costs by raising your premiums. On the other hand, if it has a capable legal team and pursues 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 deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get half your deductible back, depending on the laws in your state.

In addition, 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 fathers custody rights Boulder City nv, pursue subrogation and succeeds, it will recover your expenses as well as its own.

All insurance agencies are not the same. When shopping around, it's worth examining the reputations of competing agencies to evaluate whether they pursue legitimate subrogation claims; if they resolve those claims fast; if they keep their customers informed as the case goes on; and if they then process successfully won reimbursements right away so that you can get your funding 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 protecting its income by raising your premiums, even attractive rates won't outweigh the eventual headache.