Subrogation is an idea that's understood in insurance and legal circles but rarely by the policyholders they represent. Rather than leave it to the professionals, it is in your benefit to know the nuances of the process. The more information you have about it, the better decisions you can make with regard to your insurance policy.

An insurance policy you have is an assurance that, if something bad occurs, the business that covers the policy will make restitutions in one way or another in a timely manner. If your vehicle is hit, insurance adjusters (and the judicial system, when necessary) decide who was to blame and that party's insurance pays out.

But since ascertaining who is financially accountable for services or repairs is usually a tedious, lengthy affair – and delay often adds to the damage to the victim – insurance firms in many cases opt to pay up front and assign blame after the fact. They then need a means to get back the costs if, when all is said and done, they weren't in charge of the expense.

For Example

You rush into the doctor's office with a gouged finger. You hand the nurse your health insurance card and she records your coverage information. You get stitches and your insurer is billed for the tab. But on the following morning, when you arrive at work – where the injury occurred – you are given workers compensation paperwork to turn in. Your company's workers comp policy is actually responsible for the bill, not your health insurance company. It has a vested interest in getting that money back somehow.

How Does Subrogation Work?

This is where subrogation comes in. It is the method 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. Ordinarily, only you can sue for damages done to your self or property. But under subrogation law, your insurer is given 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 Me?

For one thing, if your insurance policy stipulated 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 insurer is lax about bringing subrogation cases to court, it might choose to recover its losses by ballooning your premiums. On the other hand, if it has a capable legal team and pursues those cases enthusiastically, 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 accountable), you'll typically get half your deductible back, based on the laws in most states.

In addition, if the total cost of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as criminal law defense attorney Vancouver WA, successfully press a subrogation case, it will recover your losses in addition to its own.

All insurers are not the same. When comparing, it's worth weighing the records of competing firms to determine whether they pursue legitimate subrogation claims; if they resolve those claims with some expediency; if they keep their clients posted as the case proceeds; 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, on the other hand, an insurer has a reputation of paying out claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you'll feel the sting later.