Subrogation is a term that's understood among insurance and legal companies but often not by the customers they represent. Rather than leave it to the professionals, it would be in your self-interest to comprehend the steps of the process. The more you know about it, the better decisions you can make with regard to your insurance company.

Every insurance policy you hold is an assurance that, if something bad happens to you, the firm on the other end of the policy will make good in one way or another without unreasonable delay. If your vehicle is hit, insurance adjusters (and police, when necessary) decide who was at fault and that person's insurance covers the damages.

But since determining who is financially responsible for services or repairs is regularly a tedious, lengthy affair – and time spent waiting sometimes compounds the damage to the policyholder – insurance companies often opt to pay up front and assign blame afterward. They then need a way to get back the costs if, when there is time to look at all the facts, they weren't responsible for the expense.

For Example

You are in a highway accident. Another car crashed into yours. The police show up to assess the situation, you exchange insurance information, and you go on your way. You have comprehensive insurance and file a repair claim. Later it's determined that the other driver was at fault and his insurance should have paid for the repair of your car. How does your company get its money back?

How Does Subrogation Work?

This is where subrogation comes in. It is the process that an insurance company uses to claim payment 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. Usually, only you can sue for damages to your person or property. But under subrogation law, your insurance company is considered to have some of your rights in exchange for making good on 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 starters, if your insurance policy stipulated a deductible, it wasn't just your insurance company 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 insurance company is lax about bringing subrogation cases to court, it might opt to get back its expenses by increasing your premiums and call it a day. On the other hand, if it has a competent legal team and pursues those cases aggressively, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent to blame), you'll typically get $500 back, depending on your state laws.

Furthermore, if the total expense 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 medical malpractice attorney near me Mclean Va, successfully press a subrogation case, it will recover your losses as well as its own.

All insurers are not the same. When shopping around, it's worth looking at the records of competing agencies to find out if they pursue winnable subrogation claims; if they do so quickly; if they keep their accountholders posted as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your funding 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 income by raising your premiums, you'll feel the sting later.