Subrogation is an idea that's understood among legal and insurance professionals but often not by the people who hire them. Even if you've never heard the word before, it is in your benefit to comprehend an overview of the process. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance company.

Every insurance policy you have is an assurance that, if something bad occurs, the company on the other end of the policy will make restitutions in one way or another in a timely fashion. If your vehicle is rear-ended, insurance adjusters (and the judicial system, when necessary) decide who was at fault and that person's insurance covers the damages.

But since ascertaining who is financially accountable for services or repairs is regularly a heavily involved affair – and time spent waiting often 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 mechanism to regain the costs if, ultimately, they weren't responsible for the expense.

For Example

You are in a highway accident. Another car collided with yours. Police are called, you exchange insurance details, 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 at fault and her insurance policy should have paid for the repair of your auto. How does your insurance company get its money back?

How Does Subrogation Work?

This is where subrogation comes in. It is the method 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. Normally, only you can sue for damages done to your person or property. But under subrogation law, your insurer is given some of your rights in exchange for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.

Why Does This Matter to Me?

For one thing, if your insurance policy stipulated 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 insurance company is timid on any subrogation case it might not win, it might choose to recover its expenses by increasing your premiums. On the other hand, if it knows which cases it is owed and goes after those cases efficiently, it is acting both in its own interests and in yours. If all of the money 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 to blame), you'll typically get half your deductible back, based on the laws in most states.

Additionally, if the total price of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as social security disability lawyers paddock lake wi, successfully press a subrogation case, it will recover your losses as well as its own.

All insurers are not created equal. When comparing, it's worth measuring the records of competing agencies to determine whether they pursue winnable subrogation claims; if they do so without dragging their feet; if they keep their policyholders apprised as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, on the other hand, an insurance agency has a reputation of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, even attractive rates won't outweigh the eventual headache.