Subrogation is an idea that's well-known in insurance and legal circles but rarely by the policyholders they represent. Rather than leave it to the professionals, it is in your self-interest to comprehend the nuances of how it works. The more information you have about it, the better decisions you can make with regard to your insurance policy.

Any insurance policy you own is an assurance that, if something bad occurs, the firm that insures the policy will make restitutions without unreasonable delay. If your house burns down, for example, your property insurance steps in to pay you or pay for the repairs, subject to state property damage laws.

But since ascertaining who is financially accountable for services or repairs is usually a time-consuming affair – and delay in some cases compounds the damage to the policyholder – insurance firms in many cases decide to pay up front and assign blame afterward. They then need a way to regain the costs if, in the end, they weren't actually responsible for the expense.

Can You Give an Example?

You head to the Instacare with a sliced-open finger. You hand the receptionist your medical insurance card and he writes down your policy details. You get stitches and your insurance company is billed for the tab. But the next morning, when you clock in at work – where the accident occurred – you are given workers compensation forms to fill out. Your company's workers comp policy is in fact responsible for the invoice, not your medical insurance policy. The latter has an interest in recovering its money in some way.

How Does Subrogation Work?

This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement 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. Normally, only you can sue for damages to your person 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 the Insured?

For a start, if you have a deductible, it wasn't just your insurance company that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to get back its expenses by increasing your premiums and call it a day. On the other hand, if it has a proficient legal team and pursues those cases aggressively, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent accountable), you'll typically get $500 back, depending on the laws in your state.

Moreover, if the total loss of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as car accident attorney Marietta GA, pursue subrogation and wins, it will recover your losses in addition to its own.

All insurance agencies are not the same. When shopping around, it's worth contrasting the records of competing agencies to find out whether they pursue valid subrogation claims; if they resolve those claims with some expediency; if they keep their policyholders updated as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your funding 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 protecting its bottom line by raising your premiums, you should keep looking.