Subrogation is an idea that's understood in insurance and legal circles but sometimes not by the customers who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your self-interest to understand an overview of the process. The more you know, the more likely it is that an insurance lawsuit will work out in your favor.

An insurance policy you own is a promise that, if something bad occurs, the firm that insures the policy will make good without unreasonable delay. If you get an injury on the job, your company's workers compensation pays out for medical services. Employment lawyers handle the details; you just get fixed up.

But since determining who is financially responsible for services or repairs is usually a time-consuming affair – and time spent waiting in some cases adds to the damage to the policyholder – insurance companies often opt to pay up front and assign blame after the fact. 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.

Can You Give an Example?

You rush into the doctor's office with a sliced-open finger. You give the receptionist your medical insurance card and she takes down your coverage details. You get stitches and your insurer gets a bill for the tab. But the next afternoon, when you clock in at your place of employment – where the accident happened – your boss hands you workers compensation paperwork to file. Your workers comp policy is in fact responsible for the invoice, not your medical insurance. The latter has a right to recover its costs somehow.

How Does Subrogation Work?

This is where subrogation comes in. It is the method 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. Ordinarily, only you can sue for damages to your person or property. But under subrogation law, your insurer is considered to have some of your rights in exchange for making good on 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 the Insured?

For a start, if you have a deductible, your insurer wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – namely, $1,000. If your insurance company is timid on any subrogation case it might not win, it might choose to recover its costs by boosting your premiums. On the other hand, if it knows which cases it is owed and pursues those cases efficiently, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half accountable), you'll typically get $500 back, based on the laws in most states.

Moreover, 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 employment law olympia wa, pursue subrogation and succeeds, it will recover your losses in addition to its own.

All insurers are not created equal. When comparing, it's worth looking at the reputations of competing agencies to find out whether they pursue legitimate subrogation claims; if they resolve those claims without delay; if they keep their accountholders informed as the case goes on; 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 firm has a record of honoring claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you should keep looking.