Subrogation is a concept that's well-known in insurance and legal circles but often not by the people who hire them. Even if you've never heard the word before, it would be in your benefit to comprehend an overview of the process. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance policy.

Any insurance policy you have is a commitment that, if something bad happens to you, the business on the other end of the policy will make restitutions in one way or another without unreasonable delay. If you get injured at work, 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 ascertaining who is financially responsible for services or repairs is usually a time-consuming affair – and time spent waiting often increases the damage to the policyholder – insurance firms often decide to pay up front and figure out the blame afterward. They then need a mechanism to recover the costs if, in the end, they weren't actually responsible for the expense.

Can You Give an Example?

Your kitchen catches fire and causes $10,000 in home damages. Fortunately, you have property insurance and it pays out your claim in full. However, in its investigation it discovers that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him responsible for the damages. The house has already been repaired in the name of expediency, but your insurance firm is out $10,000. What does the firm do next?

How Subrogation Works

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. Under ordinary circumstances, 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 having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.

Why Do I Need to Know This?

For starters, if your insurance policy stipulated 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 – to be precise, $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to recover its losses by raising your premiums. On the other hand, if it has a knowledgeable legal team and goes after those cases enthusiastically, 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 accountable), you'll typically get $500 back, depending on the laws in your state.

Moreover, 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 workmans comp attorney Lithia Springs GA, pursue subrogation and wins, it will recover your costs as well as its own.

All insurers are not created equal. When comparing, it's worth examining the records of competing agencies to determine if they pursue legitimate subrogation claims; if they do so without dragging their feet; if they keep their policyholders updated as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your losses back and move on with your life. If, instead, an insurer has a record of honoring claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you'll feel the sting later.