Subrogation is a concept that's understood in legal and insurance circles 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 in your benefit to comprehend the steps of the process. The more you know, the more likely it is that relevant proceedings will work out in your favor.

Any insurance policy you hold is an assurance that, if something bad occurs, the business on the other end of the policy will make restitutions in a timely fashion. If your vehicle is hit, insurance adjusters (and the courts, when necessary) determine who was at fault and that party's insurance pays out.

But since figuring out who is financially responsible for services or repairs is usually a time-consuming affair – and time spent waiting sometimes adds to the damage to the victim – insurance companies usually opt to pay up front and assign blame afterward. They then need a method to regain the costs if, in the end, they weren't actually responsible for the payout.

For Example

You head to the hospital with a gouged finger. You hand the nurse your health insurance card and she takes down your coverage information. You get stitched up and your insurer gets an invoice for the tab. But the next afternoon, when you arrive at your place of employment – where the accident happened – your boss hands you workers compensation paperwork to file. Your employer's workers comp policy is actually responsible for the invoice, not your health insurance. 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 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 person or property. But under subrogation law, your insurer is given some of your rights for making good on 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 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 – to the tune of $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to get back its expenses by ballooning your premiums. On the other hand, if it knows which cases it is owed and goes after them enthusiastically, it is doing you a favor as well as itself. If all of the money is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found one-half responsible), you'll typically get half your deductible back, depending on your state laws.

In addition, if the total loss 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 tractor trailer accident attorney greater atlanta area, successfully press a subrogation case, it will recover your losses as well as its own.

All insurers are not the same. When comparing, it's worth examining the reputations of competing companies to find out whether they pursue winnable subrogation claims; if they resolve those claims without dragging their feet; if they keep their accountholders advised as the case continues; 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, instead, an insurance firm has a record of paying out claims that aren't its responsibility and then covering its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.