Subrogation is an idea that's well-known in legal and insurance circles but rarely by the policyholders who hire them. Even if you've never heard the word before, it would be to your advantage to know the steps of how it works. The more information you have, the better decisions you can make about your insurance company.

Any insurance policy you have is a promise that, if something bad occurs, the business on the other end of the policy will make restitutions without unreasonable delay. If you get hurt while you're on the clock, for instance, your employer's workers compensation 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 usually a confusing affair – and time spent waiting sometimes adds to the damage to the policyholder – insurance firms often opt to pay up front and assign blame after the fact. They then need a way to get back the costs if, when there is time to look at all the facts, they weren't actually responsible for the expense.

Can You Give an Example?

You rush into the Instacare with a sliced-open finger. You give the nurse your health insurance card and she takes down your plan information. You get taken care of and your insurance company gets a bill for the services. But the next afternoon, when you get to your workplace – where the accident happened – you are given workers compensation forms to turn in. Your employer's workers comp policy is in fact responsible for the expenses, not your health insurance. The latter has a right to recover its costs somehow.

How Subrogation Works

This is where subrogation comes in. It is the process that an insurance company uses to claim payment 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. Under ordinary circumstances, only you can sue for damages to your person or property. But under subrogation law, your insurance company is considered to have 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.

Why Should I Care?

For one thing, if you have a deductible, your insurance company wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to the tune of $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its losses by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases aggressively, 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 culpable), you'll typically get $500 back, based on the laws in most states.

In addition, if the total expense 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 attorney 95037, 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 reputations of competing firms to evaluate whether they pursue winnable subrogation claims; if they resolve those claims quickly; if they keep their clients informed as the case goes on; and if they then process successfully won reimbursements right away so that you can get your funding 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 covering its profitability by raising your premiums, you should keep looking.