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Subrogation is a concept that's understood among insurance and legal companies but often not by the people they represent. Even if you've never heard the word before, it is to your advantage to know an overview of the process. The more knowledgeable you are, the more likely relevant proceedings will work out in your favor.

Any insurance policy you have is a commitment that, if something bad happens to you, the firm that insures the policy will make good without unreasonable delay. If a storm damages your property, for example, your property insurance steps in to compensate you or pay for the repairs, subject to state property damage laws.

But since ascertaining who is financially responsible for services or repairs is usually a time-consuming affair – and time spent waiting often compounds the damage to the policyholder – insurance firms in many cases opt to pay up front and assign blame after the fact. They then need a method to get back the costs if, when there is time to look at all the facts, they weren't actually in charge of the payout.

Can You Give an Example?

You go to the emergency room with a gouged finger. You hand the receptionist your medical insurance card and she records your coverage information. You get stitches and your insurer is billed for the medical care. But the next day, when you arrive at your place of employment – where the accident happened – your boss hands you workers compensation forms to file. Your employer's workers comp policy is actually responsible for the expenses, not your medical insurance company. 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 method that an insurance company uses to claim reimbursement 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 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.

How Does This Affect Individuals?

For a start, if you have a deductible, it wasn't just your insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to be precise, $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to recover its costs by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them enthusiastically, it is acting both in its own interests and in yours. If all $10,000 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 to blame), you'll typically get half your deductible back, based on the laws in most states.

Moreover, if the total price of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as immigration law Herriman UT, successfully press a subrogation case, it will recover your losses as well as its own.

All insurance companies are not the same. When shopping around, it's worth looking at the reputations of competing agencies to determine whether they pursue legitimate subrogation claims; if they do so without delay; if they keep their policyholders updated as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, instead, an insurer has a record of honoring claims that aren't its responsibility and then covering its income by raising your premiums, you should keep looking.