Subrogation is a term that's well-known among legal and insurance companies but sometimes not by the people they represent. Even if it sounds complicated, it would be in your self-interest to comprehend an overview of how it works. The more information you have about it, the better decisions you can make about your insurance company.

Any insurance policy you hold is a commitment that, if something bad occurs, the firm that covers the policy will make restitutions in a timely manner. If you get an injury while working, your company's workers compensation agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.

But since figuring out who is financially accountable for services or repairs is often a heavily involved affair – and delay in some cases adds to the damage to the policyholder – insurance firms in many cases opt to pay up front and figure out the blame after the fact. They then need a path to get back the costs if, when there is time to look at all the facts, they weren't actually responsible for the expense.

Can You Give an Example?

You go to the hospital with a gouged finger. You hand the receptionist your medical insurance card and he takes down your coverage details. You get taken care of and your insurer gets a bill for the expenses. But on the following day, when you get to your place of employment – where the accident occurred – you are given workers compensation paperwork to file. Your workers comp policy is actually responsible for the payout, not your medical 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 companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Under ordinary circumstances, only you can sue for damages to your self or property. But under subrogation law, your insurer is extended 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 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 have a stake in the outcome as well – namely, $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to get back its losses by ballooning your premiums. On the other hand, if it knows which cases it is owed and goes after them aggressively, 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 50 percent to blame), you'll typically get $500 back, based on the laws in most states.

Moreover, 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 costly. If your insurance company or its property damage lawyers, such as discrimination attorney lakewood wa, pursue subrogation and wins, it will recover your expenses in addition to its own.

All insurers are not created equal. When shopping around, it's worth contrasting the reputations of competing companies to find out if they pursue legitimate subrogation claims; if they do so in a reasonable amount of time; if they keep their accountholders informed as the case goes on; 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 record of honoring claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you'll feel the sting later.