Subrogation is an idea that's understood among legal and insurance professionals but often not by the people who hire them. Even if it sounds complicated, it is in your benefit to know the nuances of how it works. The more knowledgeable you are about it, the more likely it is that an insurance lawsuit will work out in your favor.

An insurance policy you own is an assurance that, if something bad happens to you, the insurer of the policy will make restitutions without unreasonable delay. If a storm damages your property, for instance, your property insurance agrees to compensate you or enable the repairs, subject to state property damage laws.

But since determining who is financially responsible for services or repairs is typically a heavily involved affair – and time spent waiting sometimes compounds the damage to the victim – insurance companies usually decide to pay up front and assign blame later. They then need a means to recover the costs if, ultimately, they weren't in charge of the payout.

Let's Look at an Example

You arrive at the emergency room with a deeply cut finger. You give the nurse your medical insurance card and he writes down your plan details. You get taken care of and your insurer gets a bill for the services. But on the following day, when you clock in at your place of employment – where the injury happened – your boss hands you workers compensation paperwork to file. Your employer's workers comp policy is in fact responsible for the costs, not your medical insurance policy. It has a vested interest in getting that money back somehow.

How Does Subrogation Work?

This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement 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 insurer is considered to have some of your rights for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.

How Does This Affect Individuals?

For a start, 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 be precise, $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to recoup its expenses by upping your premiums. On the other hand, if it has a competent legal team and goes after those cases enthusiastically, it is doing you a favor as well as itself. 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 50 percent to blame), you'll typically get half your deductible back, based on the laws in most states.

In addition, if the total loss 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 criminal law defense attorney Vancouver WA, successfully press a subrogation case, it will recover your costs as well as its own.

All insurers are not the same. When shopping around, it's worth looking up the records of competing companies to determine whether they pursue legitimate subrogation claims; if they do so fast; if they keep their accountholders apprised as the case continues; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, instead, an insurance company has a record of paying out claims that aren't its responsibility and then covering its income by raising your premiums, even attractive rates won't outweigh the eventual headache.