Subrogation is a term that's well-known in insurance and legal circles but sometimes not by the policyholders who employ them. Rather than leave it to the professionals, it would be in your self-interest to know the nuances of how it works. The more you know, the more likely relevant proceedings will work out favorably.

An insurance policy you have is a commitment that, if something bad occurs, the business on the other end of the policy will make good without unreasonable delay. If you get injured while you're on the clock, your employer's workers compensation insurance pays out for medical services. Employment lawyers handle the details; you just get fixed up.

But since determining who is financially accountable for services or repairs is sometimes a confusing affair – and time spent waiting often compounds the damage to the policyholder – insurance companies in many cases opt to pay up front and assign blame later. They then need a method to recover the costs if, in the end, they weren't responsible for the payout.

Let's Look at an Example

You head to the doctor's office with a sliced-open finger. You hand the nurse your medical insurance card and he takes down your coverage information. You get taken care of and your insurer gets an invoice for the services. But the next morning, when you clock in at your workplace – where the injury occurred – your boss hands you workers compensation forms to turn in. Your workers comp policy is actually responsible for the payout, not your medical insurance. It has a vested interest in getting that money back in some way.

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. Under ordinary circumstances, 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 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 Does This Matter to Me?

For one thing, if your insurance policy stipulated a deductible, your insurer wasn't the only one 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 insurer is lax about bringing subrogation cases to court, it might opt to recover its expenses by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases aggressively, it is doing you a favor as well as itself. If all 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 at fault), you'll typically get half your deductible back, based on the laws in most states.

Furthermore, if the total price 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 divorce law 98501-1548, pursue subrogation and succeeds, it will recover your expenses in addition to its own.

All insurance agencies are not created equal. When comparing, it's worth looking up the records of competing firms to determine whether they pursue winnable subrogation claims; if they do so fast; if they keep their clients informed as the case goes on; and if they then process successfully won reimbursements right away so that you can get your deductible 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 protecting its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.