Subrogation is a term that's understood in insurance and legal circles but often not by the people who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your self-interest to comprehend the steps of how it works. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance policy.

Any insurance policy you own is a commitment that, if something bad happens to you, the company on the other end of the policy will make good without unreasonable delay. If your home is robbed, for instance, your property insurance agrees to remunerate you or facilitate the repairs, subject to state property damage laws.

But since figuring out who is financially accountable for services or repairs is usually a time-consuming affair – and time spent waiting often adds to the damage to the victim – insurance companies often decide to pay up front and figure out the blame after the fact. They then need a method to recover the costs if, when there is time to look at all the facts, they weren't responsible for the payout.

Can You Give an Example?

You are in an auto accident. Another car crashed into yours. The police show up to assess the situation, you exchange insurance details, and you go on your way. You have comprehensive insurance and file a repair claim. Later it's determined that the other driver was entirely to blame and her insurance should have paid for the repair of your vehicle. How does your insurance company get its funds back?

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 companies 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 to your self or property. But under subrogation law, your insurer is considered to have 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.

Why Do I Need to Know This?

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 lost some money too – namely, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its costs by upping your premiums. On the other hand, if it has a capable legal team and pursues them aggressively, it is doing you a favor as well as itself. If all of the money 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 half your deductible back, depending on your state laws.

Furthermore, if the total expense 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 workmans comp lawyer Marietta GA, successfully press a subrogation case, it will recover your losses as well as its own.

All insurance agencies are not created equal. When shopping around, it's worth contrasting the records of competing firms to determine whether they pursue winnable subrogation claims; if they resolve those claims with some expediency; 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 deductible back and move on with your life. If, instead, an insurance agency has a record of honoring claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you should keep looking.