Subrogation is an idea that's understood among insurance and legal companies but rarely by the people who hire them. Even if you've never heard the word before, it is in your self-interest to understand the steps of the process. The more you know, the more likely an insurance lawsuit will work out in your favor.

An insurance policy you have is an assurance that, if something bad occurs, the business that covers the policy will make restitutions in one way or another without unreasonable delay. If you get injured at work, for example, your employer's workers compensation agrees to pay 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 sometimes a confusing affair – and time spent waiting often adds to the damage to the victim – insurance firms usually decide to pay up front and assign blame afterward. They then need a way to regain the costs if, when there is time to look at all the facts, they weren't responsible for the payout.

For Example

You are in a car accident. Another car crashed into yours. Police are called, you exchange insurance details, 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 should have paid for the repair of your auto. How does your insurance company get its funds back?

How Does Subrogation Work?

This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement after it has paid for something that should have been paid by some other entity. 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. Under ordinary circumstances, only you can sue for damages to your person or property. But under subrogation law, your insurer 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 Should I Care?

For starters, if you have 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 the tune of $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to recover its losses by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases aggressively, it is acting both in its own interests and in yours. If all of the money 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 responsible), you'll typically get half your deductible back, depending on your state laws.

Furthermore, if the total cost of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as discrimination attorney federal way wa, pursue subrogation and wins, it will recover your costs as well as its own.

All insurance agencies are not created equal. When comparing, it's worth measuring the reputations of competing agencies to find out whether they pursue valid subrogation claims; if they do so in a reasonable amount of time; if they keep their customers informed as the case continues; and if they then process successfully won reimbursements right away so that you can get your deductible 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 covering its profitability by raising your premiums, you'll feel the sting later.