Subrogation is a concept that's well-known in legal and insurance circles but often not by the people they represent. Even if you've never heard the word before, it would be to your advantage to comprehend an overview of how it works. The more information you have, the better decisions you can make with regard to your insurance policy.

An insurance policy you own is an assurance that, if something bad happens to you, the insurer of the policy will make good in one way or another without unreasonable delay. If a fire damages your home, for instance, your property insurance agrees to remunerate you or facilitate the repairs, subject to state property damage laws.

But since figuring out who is financially accountable for services or repairs is usually a confusing affair – and delay in some cases adds to the damage to the policyholder – insurance companies in many cases opt to pay up front and assign blame afterward. They then need a way to recoup the costs if, in the end, they weren't in charge of the payout.

Can You Give an Example?

You are in a car accident. Another car ran into 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 at fault and his insurance should have paid for the repair of your auto. How does your insurance company get its funds back?

How Does Subrogation Work?

This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. 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 to your person or property. But under subrogation law, your insurer is given some of your rights for making good on 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 starters, 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 insurance company is timid on any subrogation case it might not win, it might opt to recoup its expenses by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them aggressively, it is acting both in its own interests and in yours. 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 one-half to blame), you'll typically get half your deductible back, depending on the laws in your state.

Furthermore, if the total loss of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as attorneys that specialize in auto accidents Austell GA, pursue subrogation and succeeds, it will recover your expenses as well as its own.

All insurers are not created equal. When comparing, it's worth measuring the records of competing agencies to determine whether they pursue valid subrogation claims; if they resolve those claims without delay; if they keep their clients apprised as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your money back and move on with your life. If, instead, an insurance firm has a reputation of paying out claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.