Subrogation is a term that's understood among insurance and legal firms but sometimes not by the people who employ them. Even if you've never heard the word before, it is in your self-interest to know the nuances of the process. The more knowledgeable you are, the better decisions you can make about your insurance company.

Any insurance policy you own is an assurance that, if something bad occurs, the company that insures the policy will make restitutions in a timely manner. If a hailstorm damages your house, for instance, your property insurance agrees to pay you or enable the repairs, subject to state property damage laws.

But since determining who is financially responsible for services or repairs is regularly a confusing affair – and time spent waiting in some cases adds to the damage to the policyholder – insurance firms in many cases opt to pay up front and figure out the blame afterward. They then need a means to recover the costs if, in the end, they weren't in charge of the expense.

Let's Look at an Example

You are in an auto accident. Another car crashed into yours. Police are called, you exchange insurance details, and you go on your way. You have comprehensive insurance and file a repair claim. Later it's determined that the other driver was entirely to blame and her insurance policy 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 method 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. 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 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 the Insured?

For starters, if your insurance policy stipulated a deductible, your insurer wasn't the only one 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 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 has a capable legal team and goes after them efficiently, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half at fault), you'll typically get half your deductible back, depending on the laws in your state.

Additionally, if the total price 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 car accident attorney Mableton GA, pursue subrogation and wins, it will recover your expenses in addition to its own.

All insurance companies are not created equal. When comparing, it's worth measuring the records of competing agencies to determine if they pursue valid subrogation claims; if they resolve those claims without delay; if they keep their accountholders posted 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, instead, an insurer has a record of honoring claims that aren't its responsibility and then protecting its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.