Subrogation is an idea that's understood in insurance and legal circles but often not by the customers they represent. Rather than leave it to the professionals, it is to your advantage to know the steps of the process. The more information you have, the more likely relevant proceedings will work out favorably.

An insurance policy you have is an assurance that, if something bad occurs, the company that insures the policy will make restitutions in a timely fashion. If a windstorm damages your house, for example, your property insurance agrees to remunerate you or pay for the repairs, subject to state property damage laws.

But since figuring out who is financially accountable for services or repairs is typically a heavily involved affair – and delay sometimes adds to the damage to the victim – insurance companies usually decide to pay up front and assign blame after the fact. They then need a way to regain the costs if, when all the facts are laid out, they weren't actually responsible for the payout.

Can You Give an Example?

You are in a traffic-light accident. Another car collided with yours. The police show up to assess the situation, you exchange insurance information, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later it's determined that the other driver was entirely at fault and her insurance should have paid for the repair of your car. How does your 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 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. Normally, 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 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 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 – to be precise, $1,000. If your insurer is timid on any subrogation case it might not win, it might opt to get back its losses by ballooning your premiums. On the other hand, if it knows which cases it is owed and goes after 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 deductible back. If it recovers half (for instance, in a case where you are found 50 percent responsible), you'll typically get half your deductible back, based on the laws in most states.

Additionally, 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 personal injury law firm Sumner WA, pursue subrogation and wins, it will recover your expenses as well as its own.

All insurance companies are not created equal. When shopping around, it's worth looking at the reputations of competing firms to evaluate whether they pursue valid subrogation claims; if they do so without dragging their feet; if they keep their clients updated as the case continues; and if they then process successfully won reimbursements right away so that you can get your losses back and move on with your life. If, instead, an insurer has a record of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you should keep looking.