Subrogation is a term that's understood in legal and insurance circles but sometimes not by the customers who employ them. Even if it sounds complicated, it is in your self-interest to understand an overview of the process. The more you know, the more likely it is that an insurance lawsuit will work out favorably.

Every insurance policy you own is a promise that, if something bad occurs, the firm on the other end of the policy will make good in one way or another in a timely manner. If your vehicle is in a fender-bender, insurance adjusters (and the courts, when necessary) decide who was to blame and that party's insurance covers the damages.

But since figuring out who is financially responsible for services or repairs is regularly a confusing affair – and time spent waiting in some cases compounds the damage to the policyholder – insurance companies in many cases opt to pay up front and figure out the blame after the fact. They then need a way to recover the costs if, when all is said and done, they weren't actually in charge of the expense.

For Example

You are in an auto accident. Another car crashed into yours. Police are called, you exchange insurance information, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later police tell the insurance companies that the other driver was entirely to blame and her insurance policy should have paid for the repair of your auto. How does your company get its money back?

How Does Subrogation Work?

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. Normally, only you can sue for damages to your self or property. But under subrogation law, your insurer 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.

Why Should I Care?

For one thing, if you have a deductible, your insurer wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to recoup its costs by upping your premiums. On the other hand, if it knows which cases it is owed and goes after those cases enthusiastically, it is doing you a favor as well as itself. 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 to blame), you'll typically get $500 back, depending on the laws in your state.

In addition, if the total price of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as personal injury attorney Mableton GA, successfully press a subrogation case, it will recover your losses in addition to its own.

All insurers are not the same. When shopping around, it's worth scrutinizing the reputations of competing agencies to determine whether they pursue valid subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their policyholders updated as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, on the other hand, an insurance firm has a record of honoring claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you should keep looking.