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Subrogation is an idea that's well-known among insurance and legal companies but often not by the customers they represent. Rather than leave it to the professionals, it is in your benefit to understand an overview of how it works. The more information you have, the more likely it is that an insurance lawsuit will work out in your favor.

An insurance policy you have is a promise that, if something bad happens to you, the business that covers the policy will make restitutions without unreasonable delay. If a fire damages your property, your property insurance agrees to remunerate you or pay for the repairs, subject to state property damage laws.

But since ascertaining who is financially accountable for services or repairs is typically a confusing affair – and time spent waiting often compounds the damage to the victim – insurance companies usually decide to pay up front and figure out the blame afterward. They then need a mechanism to recover the costs if, when there is time to look at all the facts, they weren't actually responsible for the expense.

For Example

Your stove catches fire and causes $10,000 in house damages. Happily, you have property insurance and it pays out your claim in full. However, the assessor assigned to your case finds out that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him to blame for the damages. You already have your money, but your insurance agency is out $10,000. What does the agency do next?

How Subrogation Works

This is where subrogation comes in. It is the process that an insurance company uses to claim payment 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. Normally, only you can sue for damages done to your person or property. But under subrogation law, your insurer is considered to have 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 Should I Care?

For starters, 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 lost some money too – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to recoup its costs by raising your premiums. On the other hand, if it has a competent legal team and pursues those cases enthusiastically, it is doing you a favor as well as itself. If all ten grand 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, depending on your state laws.

Additionally, if the total loss 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 lawyer SMYRNA, Ga, pursue subrogation and wins, it will recover your costs in addition to its own.

All insurance agencies are not created equal. When shopping around, it's worth researching the reputations of competing companies to determine if they pursue winnable subrogation claims; if they resolve those claims without dragging their feet; if they keep their accountholders informed 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, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then covering its income by raising your premiums, you'll feel the sting later.