Subrogation is a term that's understood among insurance and legal companies but often not by the people they represent. Even if it sounds complicated, it is in your benefit to understand an overview of the process. The more knowledgeable you are, the more likely it is that an insurance lawsuit will work out favorably.

Every insurance policy you hold is a commitment that, if something bad happens to you, the business on the other end of the policy will make restitutions in one way or another in a timely fashion. If you get injured while you're on the clock, your employer's workers compensation picks up the tab 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 sometimes a heavily involved affair – and delay often compounds the damage to the victim – insurance firms in many cases opt to pay up front and assign blame later. They then need a method to get back the costs if, once the situation is fully assessed, they weren't actually responsible for the payout.

For Example

You are in an auto 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 it's determined that the other driver was entirely at fault and her insurance policy should have paid for the repair of your car. How does your company get its money back?

How Subrogation Works

This is where subrogation comes in. It is the method 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. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurer is extended some of your rights 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 Individuals?

For starters, if your insurance policy stipulated a deductible, it wasn't just your insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to recoup its costs by ballooning your premiums. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found one-half responsible), you'll typically get half your deductible back, based on the laws in most states.

Moreover, if the total cost 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 wrongful death lawyer Bonney Lake, Wa, pursue subrogation and wins, it will recover your costs in addition to its own.

All insurance companies are not created equal. When shopping around, it's worth looking up the reputations of competing companies to find out whether they pursue winnable subrogation claims; if they resolve those claims without delay; if they keep their customers apprised as the case continues; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, on the other hand, an insurer has a reputation of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.