Subrogation is a term that's well-known in legal and insurance circles but sometimes not by the people who employ them. Rather than leave it to the professionals, it is to your advantage to comprehend the steps of the process. The more knowledgeable you are, the better decisions you can make with regard to your insurance policy.

An insurance policy you hold is an assurance that, if something bad happens to you, the company on the other end of the policy will make good in one way or another without unreasonable delay. If your vehicle is rear-ended, insurance adjusters (and police, when necessary) decide who was to blame and that party's insurance pays out.

But since figuring out who is financially accountable for services or repairs is typically a time-consuming affair – and time spent waiting often 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 means to recoup the costs if, when there is time to look at all the facts, they weren't actually responsible for the expense.

Let's Look at an Example

You are in a highway 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 and file a repair claim. Later police tell the insurance companies that the other driver was to blame and her insurance should have paid for the repair of your auto. How does your insurance company get its funds back?

How Does Subrogation Work?

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 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 person or property. But under subrogation law, your insurance company 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 Do I Need to Know This?

For a start, if your insurance policy stipulated a deductible, your insurance company wasn't the only one 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 insurance company is lax about bringing subrogation cases to court, it might choose to get back its costs by boosting your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and goes after them efficiently, 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 50 percent responsible), you'll typically get $500 back, based on the laws in most states.

Moreover, if the total expense of an accident is over 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 divorce lawyer 98501, successfully press a subrogation case, it will recover your losses in addition to its own.

All insurers are not created equal. When comparing, it's worth examining the reputations of competing firms to evaluate if they pursue valid subrogation claims; if they do so without dragging their feet; if they keep their accountholders advised as the case continues; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, on the other hand, an insurance company has a reputation of paying out claims that aren't its responsibility and then covering its bottom line by raising your premiums, you'll feel the sting later.