Subrogation is a term that's well-known among legal and insurance professionals but sometimes not by the policyholders they represent. Even if it sounds complicated, it would be in your benefit to comprehend an overview of how it works. The more knowledgeable you are about it, the better decisions you can make about your insurance policy.

An insurance policy you have is an assurance that, if something bad occurs, the insurer of the policy will make restitutions in a timely manner. If you get injured while working, 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 typically a confusing affair – and delay in some cases adds to the damage to the policyholder – insurance firms usually opt to pay up front and assign blame after the fact. They then need a path to recoup the costs if, when all is said and done, they weren't in charge of the payout.

Can You Give an Example?

You are in a car accident. Another car ran into 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 to blame and his insurance should have paid for the repair of your car. How does your insurance company get its money back?

How Subrogation Works

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 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 insurer is extended 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.

How Does This Affect Me?

For one thing, if you have a deductible, your insurer wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – 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 ballooning your premiums. On the other hand, if it knows which cases it is owed and goes after those cases enthusiastically, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get half your deductible back, depending on your state laws.

In addition, if the total expense 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 criminal law defense lawyer Portland OR, successfully press a subrogation case, it will recover your costs in addition to its own.

All insurance companies are not the same. When comparing, it's worth contrasting the reputations of competing companies to determine if they pursue winnable subrogation claims; if they do so quickly; if they keep their policyholders posted as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your losses 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 protecting its income by raising your premiums, you should keep looking.