Subrogation is a term that's understood among legal and insurance professionals but sometimes not by the customers who hire them. Rather than leave it to the professionals, it is to your advantage to comprehend the nuances of the process. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance company.

Any insurance policy you hold is a commitment 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 fashion. If you get injured on the job, for example, your employer's workers compensation picks up the tab 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 heavily involved affair – and delay in some cases compounds the damage to the policyholder – insurance firms in many cases decide to pay up front and figure out the blame afterward. They then need a method to recoup the costs if, once the situation is fully assessed, they weren't in charge of the payout.

Let's Look at an Example

You head to the hospital with a deeply cut finger. You hand the nurse your medical insurance card and she writes down your plan information. You get taken care of and your insurer gets an invoice for the medical care. But the next day, when you arrive at your workplace – where the accident happened – you are given workers compensation forms to turn in. Your workers comp policy is in fact responsible for the bill, not your medical insurance. It has a vested interest in getting that money back somehow.

How Subrogation Works

This is where subrogation comes in. It is the way that an insurance company uses to claim payment 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. Usually, only you can sue for damages to your person or property. But under subrogation law, your insurer is extended 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 starters, 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 the tune of $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to recoup its losses by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases enthusiastically, 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 responsible), you'll typically get $500 back, depending on your state laws.

Additionally, if the total loss 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 fathers custody rights henderson nv, pursue subrogation and wins, it will recover your expenses in addition to its own.

All insurance agencies are not created equal. When shopping around, it's worth looking up the reputations of competing firms to find out if they pursue valid subrogation claims; if they resolve those claims without dragging their feet; if they keep their clients apprised 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, on the other hand, an insurer 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.