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.