Subrogation is a concept that's well-known in legal and insurance circles but often not by the people who employ them. Rather than leave it to the professionals, it would be to your advantage to understand an overview of how it works. The more knowledgeable you are about it, the more likely it is that relevant proceedings will work out in your favor.

Any insurance policy you own is a commitment that, if something bad happens to you, the business on the other end of the policy will make good 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) determine who was to blame and that party's insurance covers the damages.

But since ascertaining who is financially responsible for services or repairs is typically a tedious, lengthy affair – and time spent waiting in some cases increases the damage to the victim – insurance firms in many cases decide to pay up front and assign blame afterward. They then need a way to get back the costs if, ultimately, they weren't actually responsible for the payout.

Let's Look at an Example

Your kitchen catches fire and causes $10,000 in house damages. Fortunately, you have property insurance and it pays out your claim in full. However, the insurance investigator finds out that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him accountable for the damages. The home has already been fixed up in the name of expediency, but your insurance company is out all that money. What does the company do next?

How Subrogation Works

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 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 done to your person or property. But under subrogation law, your insurance company is considered to have some of your rights in exchange 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 the Insured?

For starters, if you have a deductible, it wasn't just your insurance company 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 timid on any subrogation case it might not win, it might opt to recoup its costs by raising your premiums. On the other hand, if it knows which cases it is owed and pursues them aggressively, it is doing you a favor as well as itself. If all is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found one-half culpable), you'll typically get $500 back, based on the laws in most states.

Additionally, 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 workmans comp attorney Mableton GA, pursue subrogation and wins, it will recover your losses as well as its own.

All insurers are not created equal. When comparing, it's worth examining the reputations of competing agencies to evaluate whether they pursue valid subrogation claims; if they do so with some expediency; if they keep their accountholders 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, 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, you should keep looking.