Subrogation is a concept that's well-known among insurance and legal firms but rarely by the policyholders who hire them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your benefit to understand an overview of how it works. The more you know about it, the better decisions you can make about your insurance company.

An insurance policy you own is an assurance that, if something bad happens to you, the insurer of the policy will make restitutions in one way or another in a timely manner. If your property is broken into, your property insurance steps in to pay you or enable the repairs, subject to state property damage laws.

But since determining who is financially responsible for services or repairs is regularly a tedious, lengthy affair – and delay sometimes compounds the damage to the victim – insurance firms often opt to pay up front and figure out the blame later. They then need a way to recover the costs if, when all is said and done, they weren't actually in charge of the payout.

Can You Give an Example?

You go to the emergency room with a deeply cut finger. You give the receptionist your medical insurance card and he records your plan details. You get stitches and your insurance company is billed for the medical care. But the next morning, when you get to your place of employment – where the accident happened – you are given workers compensation paperwork to turn in. Your employer's workers comp policy is actually responsible for the payout, not your medical insurance. It has a vested interest in getting that money back somehow.

How Subrogation Works

This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement 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. Under ordinary circumstances, only you can sue for damages done to your self or property. But under subrogation law, your insurance company 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 Individuals?

For a start, if you have a deductible, it wasn't just your insurance company who 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 unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its costs by upping your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and pursues them 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 50 percent at fault), you'll typically get $500 back, based on the laws in most states.

In addition, if the total expense of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as probate law attorney decatur tx, successfully press a subrogation case, it will recover your losses as well as its own.

All insurance companies are not created equal. When comparing, it's worth looking up the records of competing agencies to determine whether they pursue legitimate subrogation claims; if they do so in a reasonable amount of time; if they keep their customers posted as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your funding back and move on with your life. If, on the other hand, an insurer has a record of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, you should keep looking.

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