Subrogation is a concept that's understood among legal and insurance professionals but rarely by the people they represent. Rather than leave it to the professionals, it is in your self-interest to comprehend the nuances 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 promise that, if something bad occurs, the business on the other end of the policy will make good in one way or another without unreasonable delay. If your vehicle is hit, insurance adjusters (and the judicial system, when necessary) determine who was at fault and that person's insurance pays out.

But since ascertaining who is financially accountable for services or repairs is usually a time-consuming affair – and delay in some cases compounds the damage to the policyholder – insurance companies usually opt to pay up front and assign blame later. They then need a way to get back the costs if, ultimately, they weren't in charge of the expense.

For Example

You are in a car accident. Another car ran into yours. The police show up to assess the situation, 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 entirely at fault and his insurance policy should have paid for the repair of your car. How does your company get its funds 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. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is considered to have 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.

Why Should I Care?

For starters, if your insurance policy stipulated a deductible, your insurance company wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to the tune of $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its expenses by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after 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 50 percent accountable), you'll typically get $500 back, based on the laws in most states.

Moreover, if the total loss 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 Criminal Defense Attorney Hillsboro Or, pursue subrogation and wins, it will recover your costs in addition to its own.

All insurers are not created equal. When comparing, it's worth examining the reputations of competing firms to determine whether they pursue legitimate subrogation claims; if they do so fast; if they keep their accountholders informed as the case goes on; 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 insurer has a reputation of honoring claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.