Subrogation is a concept that's understood in legal and insurance circles but sometimes not by the people they represent. Even if it sounds complicated, it is in your benefit to comprehend the nuances of the process. The more knowledgeable you are, the better decisions you can make about your insurance policy.

Every insurance policy you have is a commitment that, if something bad occurs, the business on the other end of the policy will make restitutions in a timely fashion. If your vehicle is in a fender-bender, insurance adjusters (and the courts, when necessary) determine who was to blame and that party's insurance pays out.

But since figuring out who is financially accountable for services or repairs is often a confusing affair – and time spent waiting often increases the damage to the policyholder – insurance companies usually decide to pay up front and assign blame afterward. They then need a means to recover the costs if, when all the facts are laid out, they weren't in charge of the payout.

Can You Give an Example?

Your stove catches fire and causes $10,000 in home damages. Luckily, you have property insurance and it pays for the repairs. However, in its investigation it finds out that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him responsible for the damages. You already have your money, but your insurance company is out $10,000. What does the company do next?

How Subrogation Works

This is where subrogation comes in. It is the process that an insurance company uses to claim payment 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. Under ordinary circumstances, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is given 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 Individuals?

For a start, if you have a deductible, it wasn't just your insurance company 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 insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its costs by boosting your premiums. 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 ten grand is recovered, you will get your full thousand-dollar 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.

Additionally, if the total expense of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as criminal attorney Portland, OR, successfully press a subrogation case, it will recover your losses as well as its own.

All insurers are not the same. When comparing, it's worth scrutinizing the records of competing agencies to determine if they pursue winnable subrogation claims; if they resolve those claims with some expediency; if they keep their customers updated 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 reputation of paying out claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you should keep looking.