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Subrogation is a concept that's well-known among insurance and legal firms but often not by the people who hire them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is to your advantage to comprehend the nuances of how it works. The more you know 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 insurer of the policy will make good in a timely manner. If your property burns down, for example, your property insurance agrees to remunerate you or facilitate the repairs, subject to state property damage laws.

But since figuring out who is financially accountable for services or repairs is typically a tedious, lengthy affair – and delay sometimes adds to the damage to the victim – insurance companies in many cases opt to pay up front and figure out the blame after the fact. They then need a means to regain the costs if, when all the facts are laid out, they weren't in charge of the payout.

Let's Look at an Example

You go to the Instacare with a gouged finger. You hand the nurse your medical insurance card and he takes down your coverage information. You get stitched up and your insurer gets an invoice for the expenses. But on the following day, when you arrive at work – where the accident happened – you are given workers compensation forms to fill out. Your employer's workers comp policy is in fact responsible for the expenses, not your medical insurance. The latter has an interest in recovering its money somehow.

How Does Subrogation Work?

This is where subrogation comes in. It is the way 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. Ordinarily, only you can sue for damages done to your self or property. But under subrogation law, your insurer is given some of your rights 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.

Why Do I Need to Know This?

For one thing, if your insurance policy stipulated a deductible, your insurer wasn't the only one 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 unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its costs by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half culpable), you'll typically get half your deductible back, based on the laws in most states.

In addition, if the total cost 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 car accident attorney Norcross GA, pursue subrogation and wins, it will recover your losses as well as its own.

All insurance companies are not created equal. When comparing, it's worth contrasting the reputations of competing companies to find out whether they pursue valid subrogation claims; if they resolve those claims without delay; if they keep their accountholders posted as the case continues; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, on the other hand, an insurance firm has a reputation of paying out claims that aren't its responsibility and then covering its income by raising your premiums, even attractive rates won't outweigh the eventual headache.