Subrogation is an idea that's well-known in legal and insurance circles but rarely by the people who hire them. Even if you've never heard the word before, it would be in your benefit to understand the nuances of the process. The more information you have about it, the better decisions you can make with regard to your insurance company.

Every insurance policy you hold is a promise that, if something bad occurs, the insurer of the policy will make good without unreasonable delay. If your house is broken into, for instance, your property insurance agrees to remunerate you or facilitate the repairs, subject to state property damage laws.

But since determining who is financially responsible for services or repairs is typically a heavily involved affair – and time spent waiting in some cases adds to the damage to the victim – insurance firms often opt to pay up front and figure out the blame afterward. They then need a means to recoup the costs if, once the situation is fully assessed, they weren't in charge of the expense.

Can You Give an Example?

You are in a vehicle accident. Another car collided with yours. The police show up to assess the situation, you exchange insurance information, and you go on your way. You have comprehensive insurance and file a repair claim. Later police tell the insurance companies that the other driver was to blame and his insurance should have paid for the repair of your auto. How does your insurance company get its money back?

How Does Subrogation Work?

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 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 insurance company is given some of your rights in exchange for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.

How Does This Affect Me?

For a start, if your insurance policy stipulated a deductible, it wasn't just your insurance company that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to get back its expenses by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues 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 deductible back. If it recovers half (for instance, in a case where you are found 50 percent to blame), you'll typically get $500 back, depending on the laws in your state.

Furthermore, if the total cost 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 civil rights university place wa, successfully press a subrogation case, it will recover your costs as well as its own.

All insurers are not the same. When comparing, it's worth looking up the reputations of competing companies to evaluate whether they pursue valid subrogation claims; if they do so without delay; if they keep their customers informed as the case proceeds; 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 insurer has a record of paying out claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you should keep looking.