Subrogation is a term that's well-known among legal and insurance companies but sometimes not by the people who employ them. Even if it sounds complicated, it is in your self-interest to understand the nuances of the process. The more you know about it, the better decisions you can make about your insurance company.

Any insurance policy you have is a commitment that, if something bad happens to you, the firm that insures the policy will make good without unreasonable delay. If you get injured at work, for instance, your company's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.

But since determining who is financially accountable for services or repairs is regularly a confusing affair – and delay sometimes increases the damage to the policyholder – insurance companies usually opt to pay up front and assign blame after the fact. They then need a path to recoup the costs if, in the end, they weren't actually in charge of the expense.

For Example

You are in a highway accident. Another car collided with yours. Police are called, you exchange insurance details, 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 at fault and her insurance should have paid for the repair of your car. How does your 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. Normally, only you can sue for damages done to your person or property. But under subrogation law, your insurer is extended some of your rights in exchange for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.

How Does This Affect Policyholders?

For a start, 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 be precise, $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to recoup its costs by boosting your premiums. On the other hand, if it has a knowledgeable legal team and goes after them enthusiastically, 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 50 percent at fault), you'll typically get half your deductible 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 criminal lawyer Portland, OR, successfully press a subrogation case, it will recover your expenses in addition to its own.

All insurers are not the same. When comparing, it's worth contrasting the records of competing agencies to evaluate whether they pursue winnable subrogation claims; if they resolve those claims without delay; if they keep their clients apprised as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, instead, an insurer has a reputation of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, you should keep looking.