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.