Subrogation is a concept that's understood in insurance and legal circles but rarely by the customers who employ them. Even if it sounds complicated, it is in your benefit to understand the steps of how it works. The more you know about it, the better decisions you can make about your insurance company.

An insurance policy you hold is an assurance that, if something bad happens to you, the firm that insures the policy will make restitutions in one way or another without unreasonable delay. If you get injured while working, for example, 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 sometimes a tedious, lengthy affair – and time spent waiting in some cases adds to the damage to the victim – insurance firms often opt to pay up front and figure out the blame later. They then need a mechanism to get back the costs if, when all the facts are laid out, they weren't in charge of the payout.

For Example

You rush into the Instacare with a deeply cut finger. You give the receptionist your health insurance card and he takes down your plan information. You get stitched up and your insurer gets a bill for the tab. But on the following afternoon, when you clock in at your place of employment – where the accident occurred – your boss hands you workers compensation paperwork to turn in. Your employer's workers comp policy is in fact responsible for the bill, not your health insurance policy. It has a vested interest in getting that money back in some way.

How Does Subrogation Work?

This is where subrogation comes in. It is the way that an insurance company uses to claim reimbursement 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 self or property. But under subrogation law, your insurer is extended some of your rights for having taken care of the damages. It can go after the money 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 – to the tune of $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to recoup its losses by increasing your premiums. On the other hand, if it knows which cases it is owed and pursues those cases enthusiastically, it is acting both in its own interests and in yours. If all is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found one-half to blame), you'll typically get half your deductible back, depending on your state laws.

Furthermore, if the total loss of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as auto accident attorneys Canton GA, successfully press a subrogation case, it will recover your losses as well as its own.

All insurance agencies are not created equal. When comparing, it's worth researching the reputations of competing agencies to evaluate if they pursue winnable subrogation claims; if they do so quickly; if they keep their policyholders informed as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your losses back and move on with your life. If, instead, an insurance company has a reputation of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, you should keep looking.