Subrogation is a concept that's well-known in insurance and legal circles but sometimes not by the people who employ them. Even if it sounds complicated, it is in your benefit to know the steps of how it works. The more information you have, the better decisions you can make about your insurance company.

Every insurance policy you own is a promise that, if something bad happens to you, 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 rear-ended, insurance adjusters (and the judicial system, when necessary) decide who was at fault and that party's insurance pays out.

But since ascertaining who is financially accountable for services or repairs is typically a time-consuming affair – and time spent waiting in some cases increases the damage to the victim – insurance companies in many cases opt to pay up front and assign blame afterward. They then need a mechanism to get back the costs if, when all the facts are laid out, they weren't responsible for the payout.

Let's Look at an Example

You are in a vehicle accident. Another car collided with yours. The police show up to assess the situation, 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 at fault and his insurance should have paid for the repair of your vehicle. How does your insurance 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 when it pays out a claim that turned out not to be its responsibility. 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 done to your self or property. But under subrogation law, your insurance company is considered to have 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.

Why Should I Care?

For a start, 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 insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its expenses by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases efficiently, it is doing you a favor as well as itself. If all $10,000 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 culpable), you'll typically get $500 back, based on the laws in most states.

In addition, if the total expense of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as lawyers in immigration Sandy Ut, pursue subrogation and wins, it will recover your costs in addition to its own.

All insurance companies are not the same. When comparing, it's worth looking at the reputations of competing companies to evaluate whether they pursue winnable subrogation claims; if they do so without delay; if they keep their account holders posted as the case continues; 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 paying out claims that aren't its responsibility and then covering its income by raising your premiums, you should keep looking.