Subrogation is a concept that's understood among insurance and legal professionals but rarely by the people who employ them. Even if you've never heard the word before, it is in your self-interest to understand the nuances of the process. The more information you have about it, the more likely relevant proceedings will work out favorably.

Every insurance policy you have is a commitment that, if something bad occurs, the business that covers the policy will make good without unreasonable delay. If you get an injury while working, for example, your employer's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.

But since determining who is financially responsible for services or repairs is typically a heavily involved affair – and delay sometimes increases the damage to the victim – insurance firms in many cases opt to pay up front and figure out the blame afterward. They then need a method to get back the costs if, when all is said and done, they weren't in charge of the expense.

Let's Look at an Example

You are in a car accident. Another car collided with yours. Police are called, you exchange insurance information, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later it's determined that the other driver was entirely at fault and his insurance should have paid for the repair of your vehicle. 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. Usually, only you can sue for damages to your person or property. But under subrogation law, your insurer is extended some of your rights in exchange for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.

Why Should I Care?

For starters, if your insurance policy stipulated 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 – namely, $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to recover its losses by increasing your premiums. On the other hand, if it knows which cases it is owed and pursues them aggressively, 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 $500 back, depending on your state laws.

Additionally, if the total loss 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 personal injury attorney near me Bonney Lake WA, pursue subrogation and wins, it will recover your losses in addition to its own.

All insurance companies are not the same. When shopping around, it's worth examining the records of competing companies to evaluate whether they pursue legitimate subrogation claims; if they do so in a reasonable amount of time; if they keep their accountholders posted as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, on the other hand, an insurer has a record of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you should keep looking.