Subrogation is a term that's well-known among legal and insurance companies but sometimes not by the people they represent. Even if it sounds complicated, it is in your self-interest to comprehend the steps of how it works. The more information you have about it, the better decisions you can make about your insurance policy.

Every insurance policy you have is a promise that, if something bad occurs, the insurer of the policy will make good in a timely fashion. If you get injured while working, your company's workers compensation pays out for medical services. Employment lawyers handle the details; you just get fixed up.

But since figuring out who is financially accountable for services or repairs is sometimes a tedious, lengthy affair – and delay sometimes compounds the damage to the victim – insurance firms usually decide to pay up front and assign blame later. They then need a method to get back the costs if, ultimately, they weren't actually in charge of the expense.

Let's Look at an Example

You are in an auto accident. Another car collided with yours. The police show up to assess the situation, you exchange insurance information, 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 money 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. Under ordinary circumstances, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is extended some of your rights for having taken care of the damages. It can go after the money that was originally due to you, because it has covered the amount already.

Why Do I Need to Know This?

For a start, if you have a deductible, your insurance company wasn't the only one that 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 unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its losses by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them aggressively, it is doing you a favor as well as itself. If all is recovered, you will get your full thousand-dollar 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.

Moreover, if the total cost 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 criminal law defense lawyer Portland OR, pursue subrogation and wins, it will recover your costs as well as its own.

All insurance agencies are not created equal. When comparing, it's worth looking at the reputations of competing companies to evaluate whether they pursue valid subrogation claims; if they resolve those claims without delay; if they keep their customers posted as the case continues; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, instead, an insurance agency has a reputation of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you'll feel the sting later.