Subrogation is a term that's understood in legal and insurance circles but sometimes not by the customers they represent. Rather than leave it to the professionals, it would be in your self-interest to comprehend the steps of how it works. The more knowledgeable you are, the more likely relevant proceedings will work out in your favor.

Every insurance policy you have is an assurance that, if something bad occurs, the company that covers the policy will make restitutions in one way or another in a timely manner. If your vehicle is in a fender-bender, insurance adjusters (and the courts, when necessary) determine who was at fault and that person's insurance pays out.

But since determining who is financially accountable for services or repairs is typically a heavily involved affair – and delay in some cases adds to the damage to the victim – insurance companies in many cases decide to pay up front and figure out the blame after the fact. They then need a way to recover the costs if, when all is said and done, they weren't actually responsible for the expense.

For Example

You head to the emergency room with a gouged finger. You hand the nurse your medical insurance card and she records your coverage information. You get stitches and your insurer is billed for the expenses. But the next afternoon, when you clock in at your workplace – where the accident occurred – your boss hands you workers compensation forms to file. Your workers comp policy is in fact responsible for the invoice, not your medical insurance. 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 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. Usually, only you can sue for damages done to your self or property. But under subrogation law, your insurer is considered to have some of your rights in exchange 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.

How Does This Affect the Insured?

For one thing, if you have a deductible, your insurer wasn't the only one who 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 lax about bringing subrogation cases to court, it might choose to recover its costs by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases efficiently, it is acting both in its own interests and in yours. If all of the money 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, based on the laws in most states.

Additionally, if the total loss 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 divorce lawyer east olympia wa, successfully press a subrogation case, it will recover your costs in addition to its own.

All insurers are not created equal. When comparing, it's worth contrasting the reputations of competing companies to evaluate if they pursue winnable subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their customers advised as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, instead, an insurance company has a record of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, you'll feel the sting later.