Subrogation is a term that's well-known in legal and insurance circles but rarely by the policyholders they represent. Even if you've never heard the word before, it would be in your benefit to understand the steps of the process. The more information you have, the more likely it is that an insurance lawsuit will work out favorably.

Every insurance policy you have is a promise that, if something bad happens to you, the company on the other end of the policy will make restitutions in one way or another without unreasonable delay. If you get injured while you're on the clock, for instance, 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 often a time-consuming affair – and time spent waiting often increases the damage to the policyholder – insurance companies usually decide to pay up front and assign blame after the fact. They then need a method to recoup the costs if, when there is time to look at all the facts, they weren't actually responsible for the expense.

Can You Give an Example?

You are in a highway accident. Another car crashed into 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 at fault and his insurance should have paid for the repair of your vehicle. How does your company get its money back?

How Subrogation Works

This is where subrogation comes in. It is the method 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 extended 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.

How Does This Affect Me?

For one thing, if your insurance policy stipulated a deductible, your insurer wasn't the only one that 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 insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its costs by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is acting both in its own interests and in yours. If all $10,000 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 culpable), you'll typically get half your deductible back, depending on the laws in your state.

Furthermore, if the total expense 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 auto accident powder springs ga, successfully press a subrogation case, it will recover your losses in addition to its own.

All insurance agencies are not the same. When comparing, it's worth looking up the records of competing firms to determine whether they pursue winnable subrogation claims; if they do so fast; if they keep their policyholders apprised as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, instead, an insurer has a reputation of paying out claims that aren't its responsibility and then protecting its income by raising your premiums, you'll feel the sting later.