Subrogation is a term that's well-known among insurance and legal firms but rarely by the policyholders they represent. Even if you've never heard the word before, it would be in your benefit to understand an overview of the process. The more information you have about it, the more likely it is that an insurance lawsuit will work out in your favor.

Every insurance policy you have is a commitment that, if something bad happens to you, the company on the other end of the policy will make restitutions without unreasonable delay. If a windstorm damages your property, your property insurance agrees to compensate you or enable the repairs, subject to state property damage laws.

But since ascertaining who is financially responsible for services or repairs is regularly a heavily involved affair – and delay sometimes increases the damage to the policyholder – insurance firms usually opt to pay up front and figure out the blame afterward. They then need a means to recover the costs if, when all is said and done, they weren't responsible for the expense.

Can You Give an Example?

You go to the emergency room with a sliced-open finger. You give the receptionist your medical insurance card and he records your coverage information. You get taken care of and your insurer gets a bill for the expenses. But the next day, when you get to your place of employment – where the injury happened – your boss hands you workers compensation paperwork to fill out. Your workers comp policy is actually responsible for the hospital trip, not your medical insurance policy. It has a vested interest in getting that money back in some way.

How Subrogation Works

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. Normally, 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 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 that 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 insurer is lax about bringing subrogation cases to court, it might choose to get back its expenses by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases aggressively, it is acting both in its own interests and in yours. 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.

Additionally, if the total price 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 criminal lawyer Hillsboro, OR, pursue subrogation and succeeds, it will recover your costs in addition to its own.

All insurance companies are not the same. When comparing, it's worth researching the reputations of competing firms to determine if they pursue valid subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their customers advised 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, on the other hand, an insurer has a reputation of paying out claims that aren't its responsibility and then covering its profit margin by raising your premiums, you'll feel the sting later.