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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 self-interest to understand the steps of the process. The more you know about it, the more likely it is that an insurance lawsuit will work out favorably.

Every insurance policy you have is an assurance that, if something bad happens to you, the insurer of the policy will make good without unreasonable delay. If you get injured at work, your company's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.

But since ascertaining who is financially responsible for services or repairs is typically a confusing affair – and delay sometimes increases the damage to the victim – insurance companies often opt to pay up front and assign blame afterward. They then need a way to get back the costs if, when there is time to look at all the facts, they weren't in charge of the payout.

For Example

You are in a highway accident. Another car ran into yours. Police are called, you exchange insurance details, and you go on your way. You have comprehensive insurance and file a repair claim. Later it's determined that the other driver was at fault and her insurance policy should have paid for the repair of your auto. How does your company get its money back?

How Subrogation Works

This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement 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. Normally, 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 in exchange for having taken care of 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 a start, 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 lost some money too – namely, $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 raising your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases aggressively, it is acting both in its own interests and in yours. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent accountable), you'll typically get half your deductible back, based on the laws in most states.

In addition, 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 attorneys lacey wa, pursue subrogation and wins, it will recover your expenses in addition to its own.

All insurance companies are not created equal. When comparing, it's worth weighing the records of competing firms to find out if they pursue valid subrogation claims; if they do so in a reasonable amount of time; if they keep their clients informed as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your funding 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 covering its bottom line by raising your premiums, you should keep looking.