Subrogation is a concept that's well-known among insurance and legal companies but sometimes not by the people they represent. Even if it sounds complicated, it is in your self-interest to understand the steps of how it works. The more you know about it, 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 good in one way or another without unreasonable delay. If your vehicle is hit, insurance adjusters (and police, when necessary) determine who was to blame and that party's insurance covers the damages.

But since figuring out who is financially accountable for services or repairs is usually a time-consuming affair – and delay sometimes adds to the damage to the policyholder – insurance firms in many cases decide to pay up front and figure out the blame later. They then need a way to regain the costs if, when all the facts are laid out, they weren't actually responsible for the expense.

For Example

You are in a highway accident. Another car collided with yours. The police show up to assess the situation, you exchange insurance details, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later it's determined that the other driver was entirely to blame and his insurance policy should have paid for the repair of your car. How does your company get its funds back?

How Subrogation Works

This is where subrogation comes in. It is the process 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. Under ordinary circumstances, only you can sue for damages done to your self or property. But under subrogation law, your insurer is given some of your rights 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 Individuals?

For one thing, if you have a deductible, it wasn't just your insurer who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – 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 costs by ballooning your premiums and call it a day. On the other hand, if it has a proficient legal team and pursues those cases efficiently, it is doing you a favor as well as itself. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get $500 back, depending on your state laws.

Additionally, if the total expense of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as auto accident lawyer Lithia springs GA, successfully press a subrogation case, it will recover your losses as well as its own.

All insurers are not the same. When shopping around, it's worth scrutinizing the reputations of competing firms to find out if they pursue valid subrogation claims; if they do so with some expediency; if they keep their policyholders apprised as the case continues; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, instead, an insurance agency has a record of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.