Subrogation is a concept that's well-known among insurance and legal firms but often not by the customers they represent. Even if it sounds complicated, it is in your benefit to know the steps of the process. The more you know about it, the more likely it is that an insurance lawsuit will work out in your favor.

Any insurance policy you have is a commitment that, if something bad occurs, the firm on the other end of the policy will make good in one way or another without unreasonable delay. If you get hurt on the job, for example, your employer's workers compensation insurance pays out 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 tedious, lengthy affair – and time spent waiting often compounds the damage to the victim – insurance companies usually decide to pay up front and assign blame later. They then need a means to recoup the costs if, once the situation is fully assessed, they weren't in charge of the payout.

Can You Give an Example?

Your garage catches fire and causes $10,000 in house damages. Fortunately, you have property insurance and it pays for the repairs. However, the assessor assigned to your case discovers that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him to blame for the damages. You already have your money, but your insurance company is out $10,000. What does the company 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 companies 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 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 that was originally due to you, because it has covered the amount already.

Why Do I Need to Know This?

For one thing, if you have a deductible, your insurer wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to be precise, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recoup its expenses by ballooning your premiums. On the other hand, if it has a competent legal team and goes after them enthusiastically, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half accountable), you'll typically get half your deductible back, based on the laws in most states.

Additionally, if the total loss 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 Workers comp austell, pursue subrogation and succeeds, it will recover your losses as well as its own.

All insurers are not the same. When shopping around, it's worth contrasting the records of competing firms to determine if they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their clients apprised as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, instead, an insurance firm has a reputation of paying out claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.