Subrogation is an idea that's well-known in insurance and legal circles but often not by the customers they represent. Even if you've never heard the word before, it would be in your benefit to understand an overview of how it works. The more knowledgeable you are, the more likely it is that relevant proceedings will work out in your favor.

An insurance policy you have is a commitment that, if something bad happens to you, the business that covers the policy will make good without unreasonable delay. If your vehicle is hit, insurance adjusters (and the courts, when necessary) determine who was to blame and that person's insurance pays out.

But since figuring out who is financially responsible for services or repairs is often a tedious, lengthy affair – and time spent waiting sometimes compounds the damage to the victim – insurance companies usually decide to pay up front and assign blame after the fact. They then need a path to regain the costs if, when all is said and done, they weren't actually in charge of the payout.

For Example

You go to the Instacare with a sliced-open finger. You give the nurse your health insurance card and he takes down your plan details. You get stitches and your insurance company gets a bill for the tab. But the next morning, when you clock in at your place of employment – where the injury happened – you are given workers compensation paperwork to turn in. Your workers comp policy is actually responsible for the payout, not your health insurance. The latter has a right to recover its money in some way.

How Subrogation Works

This is where subrogation comes in. It is the way that an insurance company uses to claim payment 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. Normally, only you can sue for damages done to your person 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 originally due to you, because it has covered the amount already.

Why Should I Care?

For one thing, if your insurance policy stipulated a deductible, your insurance company 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 insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its losses by raising your premiums and call it a day. On the other hand, if it has a proficient legal team and pursues them enthusiastically, it is acting both in its own interests and in yours. If all ten grand is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent culpable), you'll typically get $500 back, depending on your state laws.

Moreover, if the total expense 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 fathers rights attorney Henderson NV, pursue subrogation and wins, it will recover your expenses in addition to its own.

All insurers are not created equal. When comparing, it's worth measuring the records of competing firms to evaluate whether they pursue valid subrogation claims; if they resolve those claims quickly; if they keep their policyholders updated as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, on the other hand, an insurer has a reputation of honoring 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.