Subrogation is a term that's understood among legal and insurance companies but rarely by the customers they represent. Even if it sounds complicated, it is to your advantage to understand the nuances 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 have is an assurance that, if something bad happens to you, the insurer of the policy will make good in a timely fashion. If you get hurt at work, your company's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.

But since figuring out who is financially responsible for services or repairs is regularly a heavily involved affair – and delay in some cases adds to the damage to the victim – insurance firms usually opt to pay up front and assign blame afterward. They then need a method to get back the costs if, when all is said and done, they weren't responsible for the expense.

Let's Look at an Example

You arrive at the doctor's office with a gouged finger. You give the receptionist your health insurance card and she writes down your coverage details. You get stitches and your insurer is billed for the services. But the next day, when you clock in at your workplace – where the accident happened – you are given workers compensation paperwork to file. Your employer's workers comp policy is actually responsible for the expenses, not your health insurance policy. 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 way that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. Some companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurer is extended 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.

Why Do I Need to Know This?

For starters, if you have a deductible, your insurer wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its costs by upping your premiums and call it a day. On the other hand, if it has a competent legal team and pursues those cases enthusiastically, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent accountable), you'll typically get $500 back, based on the laws in most states.

In addition, if the total price 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 Family law Las Vegas NV, successfully press a subrogation case, it will recover your losses in addition to its own.

All insurance companies are not the same. When shopping around, it's worth researching the records of competing companies to find out whether they pursue legitimate subrogation claims; if they resolve those claims fast; if they keep their policyholders apprised 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, instead, an insurer has a record of honoring claims that aren't its responsibility and then protecting its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.