Subrogation is an idea that's understood in legal and insurance circles but often not by the people they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is to your advantage to know the nuances of the process. The more information you have about it, the more likely it is that relevant proceedings will work out in your favor.

Any insurance policy you hold is an assurance that, if something bad happens to you, the insurer of the policy will make restitutions in a timely manner. If your property burns down, your property insurance steps in to compensate you or pay for the repairs, subject to state property damage laws.

But since determining who is financially responsible for services or repairs is regularly a time-consuming affair – and delay sometimes adds to the damage to the policyholder – insurance companies in many cases decide to pay up front and assign blame after the fact. They then need a method to recover the costs if, ultimately, they weren't responsible for the payout.

Can You Give an Example?

You head to the hospital with a gouged finger. You hand the receptionist your medical insurance card and she records your coverage details. You get stitches and your insurance company is billed for the services. But the next day, when you arrive at your place of employment – where the accident occurred – you are given workers compensation paperwork to turn in. Your company's workers comp policy is actually responsible for the costs, not your medical insurance company. The latter has a right to recover its costs somehow.

How Does Subrogation Work?

This is where subrogation comes in. It is the process that an insurance company uses to claim payment 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. Ordinarily, 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 in exchange for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.

Why Should I Care?

For a start, if you have a deductible, it wasn't just your insurance company who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its costs by raising your premiums. On the other hand, if it has a competent legal team and goes after them aggressively, it is acting both in its own interests and in yours. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent culpable), you'll typically get $500 back, based on the laws in most states.

In addition, if the total expense 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 fathers rights lawyer Henderson NV, pursue subrogation and wins, it will recover your losses as well as its own.

All insurers are not created equal. When shopping around, it's worth looking up the reputations of competing agencies to determine if they pursue valid subrogation claims; if they do so in a reasonable amount of time; if they keep their accountholders apprised as the case goes on; 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 insurance agency has a reputation of honoring claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you'll feel the sting later.