Subrogation is an idea that's understood among legal and insurance companies but rarely by the customers they represent. Even if you've never heard the word before, it is in your benefit to comprehend the steps of the process. The more knowledgeable you are, the more likely it is that an insurance lawsuit will work out favorably.

An insurance policy you have is a commitment that, if something bad occurs, the insurer of the policy will make good without unreasonable delay. If your vehicle is hit, insurance adjusters (and the judicial system, 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 sometimes a tedious, lengthy affair – and delay sometimes adds to the damage to the victim – insurance companies often decide to pay up front and assign blame later. They then need a means to get back the costs if, once the situation is fully assessed, they weren't actually in charge of the expense.

Can You Give an Example?

You arrive at the doctor's office with a gouged finger. You hand the nurse your health insurance card and he writes down your policy details. You get stitches and your insurance company is billed for the medical care. But on the following morning, when you arrive at work – where the accident happened – your boss hands you workers compensation forms to file. Your workers comp policy is actually responsible for the bill, not your health insurance company. The latter has an interest in recovering its money in some way.

How Does Subrogation Work?

This is where subrogation comes in. It is the process 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. Usually, only you can sue for damages to your person 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 Do I Need to Know This?

For one thing, if you have a deductible, your insurance company 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 be precise, $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to recover its expenses by increasing your premiums. On the other hand, if it knows which cases it is owed and goes after those cases aggressively, it is acting both in its own interests and in yours. If all is recovered, you will get your full $1,000 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, based on the laws in most states.

In addition, 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 auto accident lawyer Tacoma WA, pursue subrogation and wins, it will recover your expenses as well as its own.

All insurers are not created equal. When shopping around, it's worth contrasting the records of competing agencies to determine whether they pursue winnable subrogation claims; if they resolve those claims without dragging their feet; if they keep their policyholders informed as the case continues; 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 paying out claims that aren't its responsibility and then protecting its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.