Subrogation is a concept that's well-known among insurance and legal professionals but rarely by the customers who employ them. Even if you've never heard the word before, it is in your benefit to comprehend the nuances of how it works. The more information you have, the better decisions you can make about your insurance company.

Every insurance policy you have is a promise that, if something bad happens to you, the firm that covers the policy will make restitutions in a timely manner. If a blizzard damages your property, your property insurance steps in to repay you or pay for the repairs, subject to state property damage laws.

But since figuring out who is financially responsible for services or repairs is typically a confusing affair – and delay often compounds the damage to the victim – insurance firms often opt to pay up front and figure out the blame later. They then need a means to recover the costs if, when there is time to look at all the facts, they weren't actually responsible for the payout.

For Example

You are in a traffic-light accident. Another car collided with yours. Police are called, you exchange insurance information, and you go on your way. You have comprehensive insurance and file a repair claim. Later it's determined that the other driver was entirely to blame and his insurance 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 method that an insurance company uses to claim reimbursement 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 given 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 Me?

For one thing, 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 – namely, $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to recover its costs by ballooning your premiums and call it a day. On the other hand, if it has a competent legal team and goes after them efficiently, it is doing you a favor as well as itself. 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 50 percent to blame), you'll typically get half your deductible back, depending on the laws in your state.

Additionally, if the total loss of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as wrongful death lawyer Tacoma, WA, pursue subrogation and wins, it will recover your expenses in addition to its own.

All insurance companies are not created equal. When comparing, it's worth contrasting the records of competing firms to evaluate if they pursue legitimate subrogation claims; if they do so with some expediency; if they keep their customers advised as the case continues; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, instead, an insurer has a record of paying out claims that aren't its responsibility and then covering its profitability by raising your premiums, you'll feel the sting later.