Subrogation is a concept that's well-known in legal and insurance circles but rarely by the customers they represent. Even if it sounds complicated, it is to your advantage to know the nuances of the process. The more knowledgeable you are about it, the better decisions you can make about your insurance company.

An 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 a timely manner. If your vehicle is rear-ended, insurance adjusters (and police, when necessary) determine who was at fault and that party's insurance pays out.

But since figuring out who is financially responsible for services or repairs is regularly a confusing affair – and delay often increases the damage to the policyholder – insurance firms usually decide to pay up front and assign blame later. They then need a mechanism to get back the costs if, when all the facts are laid out, they weren't in charge of the expense.

Let's Look at an Example

You arrive at the Instacare with a deeply cut finger. You give the nurse your health insurance card and he takes down your policy details. You get taken care of and your insurance company gets an invoice for the services. But on the following day, when you get to your place of employment – where the accident happened – you are given workers compensation paperwork to turn in. Your workers comp policy is in fact responsible for the costs, not your health insurance policy. It has a vested interest in getting that money back somehow.

How Subrogation Works

This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. Some companies 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 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 one thing, 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 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 opt to get back its expenses by ballooning your premiums. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is acting both in its own interests and in yours. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half culpable), you'll typically get $500 back, depending on the laws in your state.

Moreover, if the total expense of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as Car Accident Lawyer in Mableton, Ga, pursue subrogation and wins, it will recover your losses in addition to its own.

All insurers are not created equal. When shopping around, it's worth measuring the records of competing agencies to determine whether they pursue legitimate subrogation claims; if they do so with some expediency; if they keep their clients apprised 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 safeguarding its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.