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Subrogation is an idea that's understood in insurance and legal circles but often not by the people they represent. Even if you've never heard the word before, it is in your benefit to understand an overview of how it works. The more you know about it, the more likely relevant proceedings will work out in your favor.

Every insurance policy you have is a promise that, if something bad occurs, the insurer of the policy will make good in one way or another in a timely fashion. If your vehicle is in a fender-bender, insurance adjusters (and the judicial system, when necessary) determine who was at fault and that party's insurance covers the damages.

But since figuring out who is financially accountable for services or repairs is often a confusing affair – and time spent waiting in some cases adds to the damage to the victim – insurance companies usually decide to pay up front and figure out the blame after the fact. They then need a path to get back the costs if, when there is time to look at all the facts, they weren't responsible for the payout.

Let's Look at an Example

You are in a vehicle accident. Another car collided with yours. The police show up to assess the situation, you exchange insurance details, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later police tell the insurance companies that the other driver was at fault and her insurance should have paid for the repair of your vehicle. How does your insurance company get its funds back?

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 to your person 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 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 lost some money too – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to recover its costs by ballooning your premiums. On the other hand, if it has a proficient legal team and goes after them efficiently, it is acting both in its own interests and in yours. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half responsible), you'll typically get $500 back, depending on your state laws.

Additionally, if the total expense 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 personal injury lawyer Lithia Springs, GA, successfully press a subrogation case, it will recover your losses in addition to its own.

All insurance agencies are not created equal. When comparing, it's worth comparing the reputations of competing agencies to find out whether they pursue winnable subrogation claims; if they resolve those claims fast; if they keep their accountholders posted as the case goes on; 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, on the other hand, an insurance firm has a reputation of paying out claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you should keep looking.

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