Subrogation is a concept that's well-known among legal and insurance companies but often not by the customers they represent. Even if you've never heard the word before, it would be in your self-interest to know the steps of the process. The more information you have about it, the more likely it is that relevant proceedings will work out in your favor.

Any insurance policy you hold is a promise that, if something bad happens to you, the firm on the other end of the policy will make restitutions in one way or another in a timely manner. If your vehicle is hit, insurance adjusters (and police, when necessary) determine who was at fault and that party's insurance pays out.

But since determining who is financially accountable for services or repairs is typically a heavily involved affair – and time spent waiting often increases the damage to the policyholder – insurance companies usually decide to pay up front and figure out the blame after the fact. They then need a way to regain the costs if, when there is time to look at all the facts, they weren't in charge of the payout.

Can You Give an Example?

Your electric outlet catches fire and causes $10,000 in home damages. Fortunately, you have property insurance and it takes care of the repair expenses. However, the assessor assigned to your case finds out that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him to blame for the damages. You already have your money, but your insurance firm is out ten grand. What does the firm do next?

How Does Subrogation Work?

This is where subrogation comes in. It is the way 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 person or property. But under subrogation law, your insurance company is extended 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.

How Does This Affect Policyholders?

For a start, if your insurance policy stipulated 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 be precise, $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to recover its costs by upping your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and goes after those cases enthusiastically, it is doing you a favor as well as itself. 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 accountable), you'll typically get half your deductible back, depending on your state laws.

In addition, if the total expense 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 Car Accident Lawyer in Marietta, Ga, successfully press a subrogation case, it will recover your losses in addition to its own.

All insurers are not the same. When shopping around, it's worth scrutinizing the reputations of competing agencies to determine whether they pursue legitimate subrogation claims; if they resolve those claims fast; if they keep their customers informed as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, instead, an insurer has a reputation of honoring claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, you'll feel the sting later.