Subrogation is an idea that's well-known in legal and insurance circles but rarely by the customers who hire them. Rather than leave it to the professionals, it is to your advantage to know the nuances of how it works. The more you know about it, the more likely it is that relevant proceedings will work out in your favor.

Any insurance policy you own is a promise that, if something bad occurs, the company on the other end of the policy will make good in one way or another in a timely fashion. If your real estate burns down, your property insurance steps in to remunerate you or enable the repairs, subject to state property damage laws.

But since figuring out who is financially responsible for services or repairs is typically a heavily involved affair – and time spent waiting in some cases increases the damage to the policyholder – insurance companies in many cases opt to pay up front and assign blame after the fact. They then need a method to regain the costs if, when all the facts are laid out, they weren't responsible for the payout.

Can You Give an Example?

Your garage catches fire and causes $10,000 in home damages. Fortunately, you have property insurance and it pays for the repairs. However, the assessor assigned to your case finds out that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him to blame for the loss. You already have your money, but your insurance company is out all that money. What does the company do next?

How Subrogation Works

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. Usually, only you can sue for damages to your person or property. But under subrogation law, your insurance company is given some of your rights 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.

Why Does This Matter to Me?

For a start, if you have a deductible, it wasn't just your insurance company 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 expenses by raising your premiums. On the other hand, if it knows which cases it is owed and goes after them enthusiastically, it is doing you a favor as well as itself. 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 $500 back, based on the laws in most states.

In addition, if the total price of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as personal injury legal assistance Bonney Lake WA, successfully press a subrogation case, it will recover your expenses as well as its own.

All insurance agencies are not created equal. When comparing, it's worth looking at the records of competing companies to determine if they pursue valid subrogation claims; if they resolve those claims fast; if they keep their clients updated as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your funding back and move on with your life. If, instead, an insurer has a reputation of paying out claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you should keep looking.