Subrogation is a concept that's understood in legal and insurance circles but often not by the customers who employ them. Rather than leave it to the professionals, it is in your benefit to understand an overview of how it works. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance company.

Every insurance policy you have is a promise that, if something bad occurs, the firm on the other end of the policy will make restitutions in a timely manner. If you get hurt while working, your employer's workers compensation agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.

But since ascertaining who is financially responsible for services or repairs is often a confusing affair – and time spent waiting sometimes compounds the damage to the policyholder – insurance companies in many cases decide to pay up front and assign blame after the fact. They then need a path to regain the costs if, when there is time to look at all the facts, they weren't in charge of the expense.

Can You Give an Example?

You head to the hospital with a gouged finger. You hand the nurse your health insurance card and she writes down your plan information. You get stitches and your insurance company gets an invoice for the expenses. But on the following day, when you arrive at your place of employment – where the injury happened – your boss hands you workers compensation paperwork to fill out. Your employer's workers comp policy is in fact responsible for the invoice, not your health insurance policy. It has a vested interest in getting that money back in some way.

How Subrogation Works

This is where subrogation comes in. It is the process 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 to your self or property. But under subrogation law, your insurance company is given some of your rights for having taken care of the damages. It can go after the money that was originally due to you, because it has covered the amount already.

How Does This Affect Policyholders?

For starters, 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 have a stake in the outcome as well – to the tune of $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to recoup its losses by boosting your premiums. On the other hand, if it has a capable legal team and goes after them enthusiastically, it is doing you a favor as well as itself. If all $10,000 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 $500 back, depending on your state laws.

Additionally, if the total price 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 insurance dispute attorneys Tacoma, WA, pursue subrogation and wins, it will recover your costs as well as its own.

All insurers are not the same. When shopping around, it's worth looking up the records of competing firms to determine whether they pursue legitimate subrogation claims; if they do so with some expediency; if they keep their customers posted as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, on the other hand, an insurer has a reputation of honoring claims that aren't its responsibility and then protecting its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.