Subrogation is an idea that's well-known among legal and insurance companies but often not by the people they represent. Even if you've never heard the word before, it would be in your self-interest to know an overview of the process. The more knowledgeable you are, the more likely an insurance lawsuit will work out favorably.

An insurance policy you own is a commitment that, if something bad occurs, the business on the other end of the policy will make good in one way or another without unreasonable delay. If a storm damages your house, for example, your property insurance steps in to remunerate you or enable the repairs, subject to state property damage laws.

But since ascertaining who is financially accountable for services or repairs is typically a confusing affair – and time spent waiting in some cases compounds the damage to the victim – insurance firms often opt to pay up front and assign blame later. They then need a way to regain the costs if, once the situation is fully assessed, they weren't in charge of the payout.

Can You Give an Example?

You head to the doctor's office with a sliced-open finger. You hand the receptionist your medical insurance card and she records your coverage information. You get stitched up and your insurer gets a bill for the tab. But on the following morning, when you arrive at your place of employment – where the accident occurred – you are given workers compensation forms to file. Your workers comp policy is in fact responsible for the costs, not your medical insurance. It has a vested interest in getting that money back in some way.

How Does Subrogation Work?

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 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 done to your self or property. But under subrogation law, your insurer is given 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.

How Does This Affect Policyholders?

For one thing, if you have a deductible, it wasn't just your insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to get back its losses by raising your premiums and call it a day. On the other hand, if it has a proficient legal team and goes after those cases enthusiastically, 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 one-half to blame), you'll typically get $500 back, based on the laws in most states.

Furthermore, if the total expense of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as auto accident attorney Marietta GA, successfully press a subrogation case, it will recover your expenses as well as its own.

All insurers are not the same. When shopping around, it's worth comparing the reputations of competing agencies to find out whether they pursue valid subrogation claims; if they resolve those claims without dragging their feet; if they keep their clients advised as the case goes on; 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 reputation of honoring claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you should keep looking.