Subrogation is an idea that's understood in insurance and legal circles but often not by the customers who employ them. Even if it sounds complicated, it is to your advantage to understand an overview of how it works. The more knowledgeable you are, the more likely relevant proceedings will work out favorably.

An insurance policy you hold is a commitment that, if something bad happens to you, the firm that covers the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and the judicial system, when necessary) decide who was to blame and that person's insurance covers the damages.

But since ascertaining who is financially accountable for services or repairs is usually a heavily involved affair – and time spent waiting in some cases compounds the damage to the policyholder – insurance companies usually opt to pay up front and assign blame after the fact. They then need a means to regain the costs if, when all the facts are laid out, they weren't in charge of the payout.

For Example

You are in a car accident. Another car ran into yours. The police show up to assess the situation, 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 her insurance policy should have paid for the repair of your vehicle. 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 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 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.

How Does This Affect Individuals?

For one thing, if your insurance policy stipulated a deductible, it wasn't just your insurance company 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 opt to recover its losses by upping your premiums. On the other hand, if it has a competent legal team and goes after them aggressively, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent responsible), you'll typically get half your deductible back, based on the laws in most states.

Moreover, if the total loss 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 attorneys that specialize in auto accidents Austell GA, pursue subrogation and succeeds, it will recover your losses as well as its own.

All insurers are not created equal. When shopping around, it's worth comparing the reputations of competing firms to determine whether they pursue valid subrogation claims; if they do so without delay; if they keep their policyholders informed as the case goes on; and if they then process successfully won reimbursements immediately 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 profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.