Subrogation is an idea that's understood among insurance and legal professionals but sometimes not by the policyholders they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be to your advantage to know the steps of the process. The more you know about it, the better decisions you can make about your insurance company.

Every insurance policy you own is a commitment that, if something bad happens to you, the firm that insures the policy will make good without unreasonable delay. If your vehicle is in a fender-bender, insurance adjusters (and police, when necessary) decide who was to blame and that party's insurance covers the damages.

But since ascertaining who is financially accountable for services or repairs is often a tedious, lengthy affair – and delay sometimes compounds the damage to the victim – insurance companies in many cases opt to pay up front and figure out the blame after the fact. They then need a way to recover the costs if, ultimately, they weren't in charge of the expense.

For 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 that pays for the repairs right away. Later it's determined that the other driver was entirely to blame and her insurance should have paid for the repair of your auto. How does your company get its funds back?

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 done to your person or property. But under subrogation law, your insurer is extended some of your rights in exchange for having taken care of 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 starters, 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 – to the tune of $1,000. If your insurance company is lax about bringing subrogation cases to court, it might opt to get back its expenses by raising your premiums. On the other hand, if it has a competent legal team and pursues them efficiently, it is acting both in its own interests and in yours. If all ten grand is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get half your deductible back, depending on the laws in your state.

Furthermore, if the total price of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as personal injury law firm Tacoma WA, pursue subrogation and wins, it will recover your expenses in addition to its own.

All insurance agencies are not the same. When shopping around, it's worth comparing the reputations of competing companies to evaluate if they pursue legitimate subrogation claims; if they do so without dragging their feet; if they keep their policyholders apprised as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, on the other hand, an insurance company has a reputation of honoring claims that aren't its responsibility and then protecting its profit margin by raising your premiums, you should keep looking.