Subrogation is a term that's well-known in insurance and legal circles but rarely by the policyholders they represent. Even if it sounds complicated, it would be in your benefit to know an overview of how it works. The more information you have, the more likely relevant proceedings will work out favorably.

Every insurance policy you own is a promise that, if something bad occurs, the business that covers the policy will make good in a timely manner. If your property is burglarized, your property insurance steps in to pay you or facilitate the repairs, subject to state property damage laws.

But since determining who is financially accountable for services or repairs is sometimes a tedious, lengthy affair – and delay in some cases compounds the damage to the victim – insurance companies often decide to pay up front and assign blame after the fact. They then need a method to get back the costs if, in the end, they weren't in charge of the payout.

Can You Give an Example?

Your garage catches fire and causes $10,000 in house damages. Happily, you have property insurance and it pays for the repairs. However, in its investigation it finds out that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him liable for the loss. The home has already been repaired in the name of expediency, but your insurance company is out ten grand. What does the company do next?

How Does Subrogation Work?

This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement after it has paid for something that should have been paid by some other entity. 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 to your self or property. But under subrogation law, your insurer is given some of your rights in exchange 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 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 have a stake in the outcome as well – namely, $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to recoup its expenses by increasing your premiums. On the other hand, if it has a proficient legal team and pursues them efficiently, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half responsible), you'll typically get half your deductible back, based on the laws in most states.

Additionally, if the total expense of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as personal injury lawyer Tacoma Wa, pursue subrogation and wins, it will recover your expenses in addition to its own.

All insurers are not the same. When shopping around, it's worth scrutinizing the reputations of competing companies to determine if they pursue winnable subrogation claims; if they do so in a reasonable amount of time; if they keep their clients advised as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, on the other hand, an insurance firm has a reputation of honoring claims that aren't its responsibility and then covering its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.