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Subrogation is a concept that's well-known in insurance and legal circles but rarely by the policyholders they represent. Even if it sounds complicated, it is in your benefit to comprehend the steps of the process. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance company.

Any insurance policy you own is an assurance that, if something bad occurs, the company that insures the policy will make restitutions without unreasonable delay. If your house is burglarized, your property insurance steps in to repay you or enable the repairs, subject to state property damage laws.

But since ascertaining who is financially responsible for services or repairs is typically a tedious, lengthy affair – and delay in some cases adds to the damage to the victim – insurance companies usually decide to pay up front and figure out the blame afterward. They then need a means to regain the costs if, when all is said and done, they weren't in charge of the expense.

For Example

You go to the Instacare with a deeply cut finger. You hand the receptionist your health insurance card and she takes down your policy information. You get stitched up and your insurer gets an invoice for the expenses. But the next day, when you get to work – where the injury happened – you are given workers compensation paperwork to file. Your workers comp policy is in fact responsible for the bill, not your health insurance. It has a vested interest in getting that money back somehow.

How Does Subrogation Work?

This is where subrogation comes in. It is the way that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. Some companies 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 person or property. But under subrogation law, your insurer is extended 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 your insurance policy stipulated a deductible, it wasn't just your insurer who 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 opt to recoup its expenses by raising your premiums. 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 $10,000 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half accountable), you'll typically get half your deductible back, depending on the laws in your state.

Moreover, if the total expense of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as auto accident attorney Powder Springs GA, successfully press a subrogation case, it will recover your costs as well as its own.

All insurance agencies are not the same. When shopping around, it's worth looking at the reputations of competing firms to find out if they pursue winnable subrogation claims; if they resolve those claims without dragging their feet; if they keep their accountholders posted as the case proceeds; 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, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then covering its income by raising your premiums, even attractive rates won't outweigh the eventual headache.