Subrogation is a concept that's well-known in legal and insurance circles but sometimes not by the people they represent. Rather than leave it to the professionals, it is in your benefit to understand the nuances of the process. The more knowledgeable you are, the better decisions you can make with regard to your insurance company.

An insurance policy you own is a promise that, if something bad happens to you, the business on the other end of the policy will make good in one way or another without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and the courts, when necessary) determine who was to blame and that person's insurance pays out.

But since figuring out who is financially accountable for services or repairs is typically a time-consuming affair – and delay often adds to the damage to the victim – insurance companies in many cases opt to pay up front and figure out the blame later. They then need a way to get back the costs if, when there is time to look at all the facts, they weren't responsible for the expense.

Can You Give an Example?

You are in a traffic-light accident. Another car collided with yours. Police are called, you exchange insurance details, and you go on your way. You have comprehensive insurance and file a repair claim. Later police tell the insurance companies that the other driver was to blame and his insurance policy should have paid for the repair of your car. How does your 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 reimbursement 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. Ordinarily, only you can sue for damages to your self or property. But under subrogation law, your insurance company is considered to have some of your rights for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.

Why Does This Matter to Me?

For a start, if your insurance policy stipulated a deductible, it wasn't just your insurance company 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 insurance company is lax about bringing subrogation cases to court, it might opt to get back its losses by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them aggressively, 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 50 percent at fault), you'll typically get $500 back, based on the laws in most states.

In addition, if the total price 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 Auto accident attorney Norcross, Ga, pursue subrogation and succeeds, it will recover your expenses in addition to its own.

All insurance agencies are not the same. When shopping around, it's worth weighing the reputations of competing firms to determine if they pursue legitimate subrogation claims; if they do so quickly; 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 money back and move on with your life. If, on the other hand, an insurer has a record of honoring claims that aren't its responsibility and then safeguarding its income by raising your premiums, you'll feel the sting later.