Subrogation is a concept that's understood among legal and insurance professionals but often not by the people they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be to your advantage to understand the nuances of how it works. The more you know, the better decisions you can make about your insurance company.

Any insurance policy you have is a commitment that, if something bad happens to you, the business on the other end of the policy will make restitutions in one way or another in a timely fashion. 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 pays out.

But since determining who is financially responsible for services or repairs is sometimes a time-consuming affair – and time spent waiting in some cases adds to the damage to the policyholder – insurance companies usually opt to pay up front and assign blame after the fact. They then need a way to recoup the costs if, when all the facts are laid out, they weren't actually responsible for the expense.

Can You Give an Example?

You go to the doctor's office with a deeply cut finger. You give the receptionist your health insurance card and he writes down your plan information. You get stitches and your insurance company gets an invoice for the tab. But the next morning, when you arrive at your workplace – where the accident happened – your boss hands you workers compensation paperwork to turn in. Your company's workers comp policy is in fact responsible for the hospital visit, not your health insurance. It has a vested interest in getting that money back somehow.

How Subrogation Works

This is where subrogation comes in. It is the method 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. Ordinarily, only you can sue for damages to your self or property. But under subrogation law, your insurance company is extended 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.

How Does This Affect the Insured?

For one thing, 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 – namely, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its losses by ballooning your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them aggressively, it is acting both in its own interests and in yours. 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 to blame), you'll typically get half your deductible back, based on the laws in most states.

Furthermore, if the total expense 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 Lithia springs GA, successfully press a subrogation case, it will recover your costs in addition to its own.

All insurance agencies are not the same. When shopping around, it's worth researching the records of competing agencies to evaluate if they pursue legitimate subrogation claims; if they do so quickly; 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 losses back and move on with your life. If, on the other hand, an insurance agency has a reputation of honoring claims that aren't its responsibility and then covering its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.