Subrogation is a concept that's understood among legal and insurance firms but rarely by the customers who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your self-interest to understand the steps of the process. The more information you have about it, the better decisions you can make about your insurance company.

Every insurance policy you own is a promise that, if something bad happens to you, the company on the other end of the policy will make restitutions without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and the courts, when necessary) decide who was to blame and that person's insurance covers the damages.

But since determining who is financially responsible for services or repairs is usually a time-consuming affair – and time spent waiting often adds to the damage to the victim – insurance firms often decide to pay up front and figure out the blame later. They then need a path to get back the costs if, ultimately, they weren't actually in charge of the payout.

For Example

You are in a car accident. Another car ran into 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 police tell the insurance companies that the other driver was entirely to blame and her insurance policy should have paid for the repair of your car. How does your insurance company get its funds 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 insurance firms 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 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 Policyholders?

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 lost some money too – to the tune of $1,000. If your insurance company is timid on any subrogation case it might not win, 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 goes after those cases aggressively, it is acting both in its own interests and in yours. If all 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 accountable), you'll typically get half your deductible back, depending on your state laws.

Furthermore, 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 accident attorney decatur, ga, pursue subrogation and succeeds, it will recover your expenses as well as its own.

All insurers are not created equal. When comparing, it's worth scrutinizing the records of competing firms to find out whether they pursue winnable subrogation claims; if they do so quickly; if they keep their customers updated as the case continues; 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 insurance company has a record of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, you'll feel the sting later.