Subrogation is a concept that's well-known in insurance and legal circles but sometimes not by the customers they represent. Rather than leave it to the professionals, it would be in your benefit to understand the nuances of how it works. The more information you have about it, the better decisions you can make about your insurance policy.

Every insurance policy you own is an assurance that, if something bad happens to you, the firm that insures the policy will make restitutions in one way or another in a timely fashion. If your property is robbed, your property insurance steps in to pay you or pay for the repairs, subject to state property damage laws.

But since figuring out who is financially accountable for services or repairs is often a heavily involved affair – and time spent waiting in some cases compounds the damage to the victim – insurance firms usually decide to pay up front and assign blame afterward. They then need a method to get back the costs if, ultimately, they weren't responsible for the expense.

Can You Give an Example?

You are in a car accident. Another car crashed into yours. Police are called, you exchange insurance information, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later it's determined that the other driver was entirely to blame and his insurance policy should have paid for the repair of your auto. How does your company get its funds back?

How Subrogation Works

This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement 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. Normally, only you can sue for damages to your person or property. But under subrogation law, your insurer is considered to have some of your rights in exchange for having taken care of the damages. It can go after the money that was originally due to you, because it has covered the amount already.

Why Should I Care?

For one thing, if your insurance policy stipulated a deductible, your insurer wasn't the only one 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 insurer is lax about bringing subrogation cases to court, it might choose to recover its expenses by raising your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases efficiently, it is doing you a favor as well as itself. If all 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 to blame), you'll typically get $500 back, depending on the laws in your state.

Furthermore, if the total loss 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 Car Accident Attorney Smyrna GA, successfully press a subrogation case, it will recover your costs as well as its own.

All insurance agencies are not the same. When shopping around, it's worth looking at the records of competing companies to determine if they pursue valid subrogation claims; if they resolve those claims without delay; if they keep their clients posted as the case continues; and if they then process successfully won reimbursements immediately so that you can get your money back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then protecting its profit margin by raising your premiums, you should keep looking.