Subrogation is an idea that's well-known in legal and insurance circles but rarely by the customers who employ them. Even if it sounds complicated, it is in your benefit to understand an overview of the process. The more you know, the more likely it is that relevant proceedings will work out favorably.

Any insurance policy you hold is a promise that, if something bad occurs, the insurer of the policy will make restitutions without unreasonable delay. If your house suffers fire damage, your property insurance agrees to compensate you or enable the repairs, subject to state property damage laws.

But since determining who is financially responsible for services or repairs is typically a time-consuming affair – and delay in some cases compounds the damage to the policyholder – insurance companies usually decide to pay up front and figure out the blame afterward. They then need a method to recoup the costs if, in the end, they weren't actually in charge of the expense.

For Example

You are in a highway accident. Another car crashed into yours. Police are called, you exchange insurance details, 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 his insurance should have paid for the repair of your auto. How does your company get its funds back?

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 done to your self or property. But under subrogation law, your insurance company is considered to have 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 Do I Need to Know This?

For one thing, if you have a deductible, your insurance company wasn't the only one who 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 recover its costs by increasing your premiums and call it a day. On the other hand, if it has a proficient legal team and goes after them efficiently, it is acting both in its own interests and in yours. If all ten grand 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 your state laws.

Furthermore, if the total expense 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 patent licensing 77092, successfully press a subrogation case, it will recover your losses as well as its own.

All insurers are not the same. When comparing, it's worth measuring the reputations of competing companies to determine if they pursue valid subrogation claims; if they resolve those claims without dragging their feet; if they keep their clients advised 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 company has a reputation of paying out claims that aren't its responsibility and then covering its income by raising your premiums, you should keep looking.