Subrogation is a term that's well-known among legal and insurance firms but often not by the customers they represent. Even if it sounds complicated, it would be in your benefit to know the nuances of the process. The more information you have, the better decisions you can make with regard to your insurance policy.

Every insurance policy you hold is an assurance that, if something bad happens to you, the business that covers the policy will make good in one way or another without unreasonable delay. If you get hurt while you're on the clock, your employer's workers compensation insurance picks up the tab 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 typically a time-consuming affair – and time spent waiting in some cases adds to the damage to the policyholder – insurance companies in many cases decide to pay up front and figure out the blame later. They then need a way to regain the costs if, once the situation is fully assessed, they weren't actually responsible for the payout.

Can You Give an Example?

Your bedroom catches fire and causes $10,000 in home damages. Fortunately, you have property insurance and it pays for the repairs. However, the assessor assigned to your case finds out that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him liable for the loss. The home has already been repaired in the name of expediency, but your insurance agency is out ten grand. What does the agency do next?

How Subrogation Works

This is where subrogation comes in. It is the process that an insurance company uses to claim payment after it has paid for something that should have been paid by some other entity. 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. Usually, only you can sue for damages done to your self 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 originally due to you, because it has covered the amount already.

Why Should I Care?

For starters, if you have a deductible, your insurance company wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to be precise, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its costs by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases efficiently, it is doing you a favor as well as itself. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half at fault), you'll typically get $500 back, based on the laws in most states.

In addition, if the total loss of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as business law salem ut, pursue subrogation and succeeds, it will recover your losses in addition to its own.

All insurers are not the same. When shopping around, it's worth measuring the records of competing agencies to evaluate if they pursue legitimate subrogation claims; if they do so without dragging their feet; if they keep their clients updated as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, on the other hand, an insurance agency has a record of paying out claims that aren't its responsibility and then covering its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.