Subrogation is a concept that's well-known among legal and insurance companies but often not by the people who employ them. Rather than leave it to the professionals, it is in your benefit to comprehend the steps of the process. The more you know about it, the better decisions you can make with regard to your insurance policy.

Every insurance policy you have is a promise that, if something bad happens to you, the insurer of the policy will make restitutions in a timely manner. If your home is burglarized, your property insurance steps in to pay you or pay for the repairs, subject to state property damage laws.

But since ascertaining who is financially accountable for services or repairs is regularly a tedious, lengthy affair – and delay in some cases compounds the damage to the policyholder – insurance firms in many cases decide to pay up front and figure out the blame afterward. They then need a means to regain the costs if, when all is said and done, they weren't in charge of the expense.

For Example

You arrive at the doctor's office with a sliced-open finger. You hand the receptionist your medical insurance card and she writes down your plan information. You get stitches and your insurance company gets a bill for the medical care. But on the following morning, when you get to work – where the accident happened – you are given workers compensation forms to fill out. Your workers comp policy is in fact responsible for the expenses, not your medical insurance company. The latter has an interest in recovering its money in some way.

How Subrogation Works

This is where subrogation comes in. It is the way that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. Some insurance firms 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 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 originally due to you, because it has covered the amount already.

Why Does This Matter to Me?

For a start, if your insurance policy stipulated a deductible, it wasn't just your insurance company who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to get back its costs by raising your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them aggressively, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent culpable), you'll typically get $500 back, depending on your state laws.

In addition, if the total loss 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 Tacoma WA, pursue subrogation and succeeds, it will recover your losses in addition to its own.

All insurers are not the same. When comparing, it's worth weighing the records of competing agencies to find out if they pursue valid subrogation claims; if they do so without delay; if they keep their accountholders informed as the case continues; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then protecting its bottom line by raising your premiums, you should keep looking.