Subrogation is an idea that's understood among insurance and legal professionals but sometimes not by the policyholders who employ them. Even if you've never heard the word before, it is in your benefit to know the nuances of how it works. The more information you have, the more likely it is that an insurance lawsuit will work out in your favor.

Every insurance policy you have is a commitment that, if something bad occurs, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If your house burns down, your property insurance steps in to remunerate you or pay for the repairs, subject to state property damage laws.

But since ascertaining who is financially responsible for services or repairs is often a confusing affair – and time spent waiting sometimes adds to the damage to the policyholder – insurance firms often decide to pay up front and assign blame after the fact. They then need a means to get back the costs if, when all the facts are laid out, they weren't actually in charge of the payout.

For Example

Your bedroom catches fire and causes $10,000 in home damages. Happily, you have property insurance and it takes care of the repair expenses. However, in its investigation it discovers that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him to blame for the loss. You already have your money, but your insurance agency is out all that money. What does the agency do next?

How Subrogation Works

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 insurance firms have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Under ordinary circumstances, only you can sue for damages done to your person or property. But under subrogation law, your insurer 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.

How Does This Affect Individuals?

For a start, if your insurance policy stipulated a deductible, it wasn't just your insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to be precise, $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to get back its expenses by increasing your premiums. On the other hand, if it knows which cases it is owed and pursues those cases aggressively, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent accountable), you'll typically get half your deductible back, depending on your state laws.

Additionally, if the total cost of an accident is over 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 immigration attorney Magna Ut, pursue subrogation and succeeds, it will recover your expenses in addition to its own.

All insurers are not the same. When comparing, it's worth examining the reputations of competing companies to determine if they pursue legitimate subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their account holders advised as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your losses back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then safeguarding its income by raising your premiums, you'll feel the sting later.