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Subrogation is an idea that's well-known in insurance and legal circles but sometimes not by the policyholders they represent. Even if you've never heard the word before, it is to your advantage to know an overview of how it works. The more you know, the better decisions you can make with regard to your insurance company.

Any insurance policy you hold is an assurance that, if something bad happens to you, the insurer of the policy will make good in one way or another without unreasonable delay. If a storm damages your property, your property insurance steps in to compensate you or pay for the repairs, subject to state property damage laws.

But since determining who is financially responsible for services or repairs is sometimes a heavily involved affair – and delay often adds to the damage to the victim – insurance companies usually decide to pay up front and assign blame later. They then need a method to recoup the costs if, when there is time to look at all the facts, they weren't actually responsible for the expense.

For Example

You head to the Instacare with a gouged finger. You hand the receptionist your medical insurance card and she takes down your plan information. You get stitches and your insurance company gets an invoice for the expenses. But the next afternoon, when you clock in at your place of employment – where the injury happened – you are given workers compensation forms to turn in. Your company's workers comp policy is in fact responsible for the invoice, not your medical insurance company. It has a vested interest in getting that money back somehow.

How Subrogation Works

This is where subrogation comes in. It is the method 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. Under ordinary circumstances, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is given some of your rights in exchange 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 one thing, if your insurance policy stipulated a deductible, your insurance company wasn't the only one who 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 insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its costs by raising your premiums and call it a day. On the other hand, if it has a proficient legal team and goes after those cases aggressively, it is doing you a favor as well as itself. If all of the money 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.

Additionally, if the total price 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 Legal representation for Bonney lake Residents, pursue subrogation and succeeds, it will recover your expenses as well as its own.

All insurers are not created equal. When shopping around, it's worth looking up the reputations of competing companies to determine if they pursue winnable subrogation claims; if they resolve those claims with some expediency; if they keep their clients advised as the case goes on; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, instead, an insurance agency has a record of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, you'll feel the sting later.