Subrogation is a concept that's understood in legal and insurance circles but sometimes not by the customers they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your self-interest to comprehend the nuances of the process. The more information you have, the more likely it is that an insurance lawsuit will work out in your favor.

An insurance policy you have is an assurance that, if something bad happens to you, the company on the other end of the policy will make restitutions in a timely manner. If you get injured while you're on the clock, your employer's workers compensation pays out 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 confusing affair – and time spent waiting sometimes compounds the damage to the policyholder – insurance companies often decide to pay up front and assign blame afterward. They then need a way to regain the costs if, once the situation is fully assessed, they weren't actually in charge of the expense.

For Example

Your kitchen catches fire and causes $10,000 in house damages. Happily, you have property insurance and it pays for the repairs. However, the assessor assigned to your case finds out that an electrician had installed some faulty wiring, and there is a decent chance that a judge would find him accountable for the damages. The house has already been repaired in the name of expediency, but your insurance agency is out $10,000. What does the agency do next?

How Does Subrogation Work?

This is where subrogation comes in. It is the process 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 done to your self or property. But under subrogation law, your insurer is extended some of your rights 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.

Why Should I Care?

For one thing, if you have a deductible, it wasn't just your insurer who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to recoup its losses by raising your premiums. On the other hand, if it has a competent legal team and goes after those cases enthusiastically, 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 culpable), you'll typically get $500 back, depending on the laws in your state.

In addition, if the total price 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 civil rights federal way 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 determine whether they pursue legitimate subrogation claims; if they do so without delay; if they keep their accountholders informed as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your funding back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then covering its bottom line by raising your premiums, you should keep looking.