Subrogation is a term that's understood in insurance and legal circles but sometimes not by the people they represent. Even if you've never heard the word before, it is in your self-interest to comprehend the nuances of the process. The more you know, the more likely it is that relevant proceedings will work out favorably.

An insurance policy you own is a commitment that, if something bad occurs, the insurer of the policy will make restitutions in a timely manner. If your vehicle is rear-ended, insurance adjusters (and the courts, when necessary) decide who was to blame and that party's insurance pays out.

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

For Example

You rush into the emergency room with a deeply cut finger. You hand the receptionist your medical insurance card and he records your policy details. You get stitched up and your insurance company gets an invoice for the services. But the next afternoon, when you get to your place of employment – where the injury happened – your boss hands you workers compensation paperwork to file. Your company's workers comp policy is actually responsible for the invoice, not your medical insurance policy. It has a vested interest in getting that money back in some way.

How Does Subrogation Work?

This is where subrogation comes in. It is the process that an insurance company uses to claim payment after it has paid for something that should have been paid by some other entity. Some companies 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 done to your self or property. But under subrogation law, your insurance company is considered to have 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.

How Does This Affect Me?

For starters, if your insurance policy stipulated a deductible, your insurance company 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 the tune of $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its losses by boosting your premiums. On the other hand, if it has a knowledgeable legal team and pursues them enthusiastically, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get $500 back, depending on your state laws.

Moreover, if the total cost 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 wrongful death lawyer Sumner, Wa, pursue subrogation and wins, it will recover your expenses as well as its own.

All insurance companies are not created equal. When comparing, it's worth weighing the reputations of competing agencies to evaluate if they pursue legitimate subrogation claims; if they resolve those claims without delay; if they keep their policyholders informed as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your deductible 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 safeguarding its profit margin by raising your premiums, you'll feel the sting later.