Subrogation is a concept that's well-known among legal and insurance firms but often not by the customers they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your self-interest to know the nuances of how it works. The more information you have about it, the better decisions you can make with regard to your insurance company.

Every insurance policy you own is an assurance that, if something bad happens to you, the insurer of the policy will make restitutions in one way or another in a timely manner. If your vehicle is in a fender-bender, insurance adjusters (and police, when necessary) decide who was to blame and that person's insurance pays out.

But since ascertaining who is financially accountable for services or repairs is often a confusing affair – and delay often compounds the damage to the victim – insurance firms often decide to pay up front and assign blame after the fact. They then need a way to recoup the costs if, when there is time to look at all the facts, they weren't actually in charge of the payout.

Can You Give an Example?

Your electric outlet catches fire and causes $10,000 in house damages. Luckily, you have property insurance and it takes care of the repair expenses. However, the assessor assigned to your case finds out that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him accountable for the loss. You already have your money, but your insurance agency is out all that money. What does the agency do next?

How Subrogation Works

This is where subrogation comes in. It is the way 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. Under ordinary circumstances, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is extended some of your rights 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.

How Does This Affect Individuals?

For starters, if you have a deductible, your insurance company wasn't the only one 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 timid on any subrogation case it might not win, it might choose to get back its expenses by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases enthusiastically, it is doing you a favor as well as itself. If all of the money 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 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 expenses as well as its own.

All insurers are not the same. When shopping around, it's worth comparing the records of competing companies to determine if they pursue legitimate subrogation claims; if they do so without dragging their feet; if they keep their policyholders posted 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 record of honoring claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you'll feel the sting later.