Subrogation is a concept that's understood in insurance and legal circles but sometimes not by the customers who hire them. Even if it sounds complicated, it is in your self-interest to know an overview of how it works. The more information you have, the better decisions you can make with regard to your insurance company.

Any insurance policy you hold is a commitment that, if something bad occurs, the company that insures the policy will make good without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and police, when necessary) decide who was to blame and that person's insurance pays out.

But since ascertaining who is financially accountable for services or repairs is regularly a tedious, lengthy affair – and time spent waiting often adds to the damage to the policyholder – insurance companies usually decide to pay up front and figure out the blame after the fact. They then need a way to recover the costs if, once the situation is fully assessed, they weren't in charge of the payout.

Let's Look at an Example

You are in a vehicle accident. Another car collided with yours. The police show up to assess the situation, you exchange insurance details, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later police tell the insurance companies that the other driver was to blame and his insurance policy should have paid for the repair of your auto. How does your company get its money back?

How Does Subrogation Work?

This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement 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. Ordinarily, only you can sue for damages done to your self or property. But under subrogation law, your insurer is given some of your rights in exchange for having taken care of 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, it wasn't just your insurer who 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 insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its losses by raising your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them enthusiastically, it is acting both in its own interests and in yours. If all is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half accountable), you'll typically get $500 back, depending on the laws in your state.

In addition, if the total cost 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 criminal lawyer Portland, OR, successfully press a subrogation case, it will recover your losses in addition to its own.

All insurers are not the same. When comparing, it's worth looking at the records of competing companies to find out whether they pursue valid subrogation claims; if they do so with some expediency; if they keep their accountholders informed as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, instead, an insurance firm has a record of paying out claims that aren't its responsibility and then covering its profitability by raising your premiums, you should keep looking.

Subrogation is a term that's understood in legal and insurance circles but often not by the customers they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your benefit to understand the nuances of how it works. The more you know, the better decisions you can make about your insurance policy.

An insurance policy you have is a promise that, if something bad occurs, the business that covers the policy will make restitutions in one way or another without unreasonable delay. If you get an injury at work, your company's workers compensation agrees to pay 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 usually a confusing affair – and time spent waiting sometimes compounds the damage to the victim – insurance firms in many cases opt to pay up front and assign blame after the fact. They then need a way to regain the costs if, in the end, they weren't actually in charge of the expense.

Can You Give an Example?

You go to the Instacare with a sliced-open finger. You give the receptionist your medical insurance card and he records your plan details. You get taken care of and your insurance company gets an invoice for the medical care. But on the following afternoon, when you arrive at your place of employment – where the accident happened – your boss hands you workers compensation paperwork to file. Your employer's workers comp policy is in fact responsible for the invoice, not your medical insurance. It has a vested interest in getting that money back in some way.

How Subrogation Works

This is where subrogation comes in. It is the way 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 extended some of your rights in exchange 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.

How Does This Affect the Insured?

For a start, if your insurance policy stipulated a deductible, it wasn't just your insurance company 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 recover its costs by upping your premiums. On the other hand, if it knows which cases it is owed and pursues those cases enthusiastically, it is doing you a favor as well as itself. If all of the money 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, based on the laws in most states.

Additionally, if the total cost 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 criminal law defense attorney Portland OR, successfully press a subrogation case, it will recover your expenses as well as its own.

All insurance companies are not the same. When comparing, it's worth looking at the records of competing agencies to find out if they pursue winnable subrogation claims; if they do so quickly; if they keep their accountholders informed as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, on the other hand, an insurer has a reputation of honoring claims that aren't its responsibility and then protecting its profitability by raising your premiums, you should keep looking.

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