Subrogation is a term that's well-known among legal and insurance professionals but rarely by the policyholders who hire them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your self-interest to comprehend the steps of the process. The more you know about it, the better decisions you can make with regard to your insurance policy.

Any insurance policy you own is a commitment that, if something bad happens to you, the firm on the other end of the policy will make good in a timely manner. If you get hurt while you're on the clock, your company's workers compensation insurance 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 often a confusing affair – and time spent waiting in some cases adds to the damage to the victim – insurance companies in many cases opt to pay up front and assign blame after the fact. They then need a path to get back the costs if, when all is said and done, they weren't in charge of the payout.

For Example

You are in a vehicle accident. Another car ran into yours. The police show up to assess the situation, 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 at fault and her insurance should have paid for the repair of your auto. How does your insurance company get its money back?

How Does Subrogation Work?

This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. 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 to your self or property. But under subrogation law, your insurer is considered to have some of your rights for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.

How Does This Affect Individuals?

For one thing, 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 have a stake in the outcome as well – namely, $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to recoup its costs by upping your premiums. On the other hand, if it has a knowledgeable legal team and goes after them aggressively, it is acting both in its own interests and in yours. If all ten grand 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 to blame), you'll typically get $500 back, based on the laws in most states.

In addition, 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 personal injury law 95037, successfully press a subrogation case, it will recover your costs in addition to its own.

All insurance companies are not created equal. When shopping around, it's worth contrasting the reputations of competing firms to find out if they pursue legitimate subrogation claims; if they resolve those claims without dragging their feet; if they keep their clients apprised as the case continues; and if they then process successfully won reimbursements quickly so that you can get your losses 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 bottom line by raising your premiums, you'll feel the sting later.