Subrogation is an idea that's understood among legal and insurance firms but often not by the customers they represent. Rather than leave it to the professionals, it is in your self-interest to know the nuances of the process. The more you know about it, the better decisions you can make about your insurance company.

An insurance policy you have is a promise that, if something bad happens to you, the firm on the other end of the policy will make restitutions without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and police, when necessary) determine who was to blame and that person's insurance pays out.

But since figuring out who is financially responsible for services or repairs is typically a tedious, lengthy affair – and time spent waiting sometimes adds to the damage to the policyholder – insurance firms usually opt to pay up front and assign blame later. They then need a method to recoup the costs if, ultimately, they weren't responsible for the expense.

Can You Give an Example?

You go to the hospital with a deeply cut finger. You hand the receptionist your health insurance card and she records your policy details. You get stitches and your insurance company gets a bill for the medical care. But the next afternoon, when you clock in at your place of employment – where the injury happened – your boss hands you workers compensation paperwork to file. Your workers comp policy is actually responsible for the costs, 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 way 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 insurance company is considered to have 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 you have a deductible, it wasn't just your insurance company 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 unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its expenses by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases 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 50 percent accountable), you'll typically get half your deductible back, based on the laws in most states.

Moreover, 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 Olympia WAshinton attorney at law,, pursue subrogation and wins, it will recover your costs as well as its own.

All insurers are not the same. When comparing, it's worth comparing the reputations of competing companies to evaluate if they pursue winnable subrogation claims; if they resolve those claims without dragging their feet; if they keep their accountholders updated as the case goes on; 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 record of honoring claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you should keep looking.