Subrogation is a concept that's well-known among legal and insurance companies but often not by the people who employ them. Even if it sounds complicated, it is to your advantage to understand the nuances of the process. The more you know about it, the more likely an insurance lawsuit will work out in your favor.

Every insurance policy you hold is a promise that, if something bad happens to you, the company on the other end of the policy will make restitutions in a timely manner. If your vehicle is in a fender-bender, insurance adjusters (and the courts, when necessary) decide who was at fault and that person's insurance pays out.

But since determining who is financially responsible for services or repairs is sometimes a time-consuming affair – and delay sometimes compounds the damage to the policyholder – insurance firms in many cases decide to pay up front and assign blame afterward. They then need a method to recoup the costs if, when there is time to look at all the facts, they weren't in charge of the payout.

Let's Look at an Example

You are in a car accident. Another car crashed into yours. The police show up to assess the situation, you exchange insurance details, and you go on your way. You have comprehensive insurance and file a repair claim. Later police tell the insurance companies that the other driver was entirely at fault and her insurance should have paid for the repair of your car. How does your 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 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. Usually, only you can sue for damages to your self or property. But under subrogation law, your insurer is considered to have some of your rights in exchange for making good on 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 one thing, if you have 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 the tune of $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to recoup its expenses by boosting your premiums. On the other hand, if it has a proficient legal team and goes after them efficiently, it is doing you a favor as well as itself. 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 responsible), you'll typically get $500 back, based on the laws in most states.

In addition, if the total expense 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 Austell GA, pursue subrogation and succeeds, it will recover your costs in addition to its own.

All insurers are not created equal. When shopping around, it's worth looking at the records of competing agencies to evaluate if they pursue legitimate subrogation claims; if they resolve those claims fast; if they keep their accountholders apprised 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 insurance firm has a reputation of paying out claims that aren't its responsibility and then protecting its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.