Subrogation is a term that's understood in legal and insurance circles but often not by the policyholders they represent. Even if you've never heard the word before, it is to your advantage to comprehend the steps of the process. The more information you have about it, the more likely it is that an insurance lawsuit will work out in your favor.

An insurance policy you own is a promise that, if something bad occurs, the business that insures the policy will make good in one way or another without unreasonable delay. If you get an injury at work, for example, your company's workers compensation insurance pays out for medical services. Employment lawyers handle the details; you just get fixed up.

But since determining who is financially accountable for services or repairs is usually a confusing affair – and time spent waiting sometimes adds to the damage to the victim – insurance companies usually opt to pay up front and assign blame afterward. They then need a way to recover the costs if, when all the facts are laid out, they weren't actually in charge of the payout.

Can You Give an Example?

Your stove catches fire and causes $10,000 in house damages. Happily, you have property insurance and it pays out your claim in full. However, the insurance investigator 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. The home has already been fixed up in the name of expediency, but your insurance agency is out all that money. What does the agency do next?

How Subrogation Works

This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. 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 considered to have some of your rights for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.

How Does This Affect Me?

For starters, if your insurance policy stipulated a deductible, your insurance company wasn't the only one 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 insurer is timid on any subrogation case it might not win, it might opt to recoup its expenses by upping your premiums. On the other hand, if it has a proficient legal team and pursues them enthusiastically, it is doing you a favor as well as itself. If all is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half responsible), you'll typically get $500 back, based on the laws in most states.

In addition, if the total price 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 civil law attorney University Place WA, pursue subrogation and wins, it will recover your losses in addition to its own.

All insurance agencies are not created equal. When comparing, it's worth examining the reputations of competing agencies to evaluate whether they pursue valid subrogation claims; if they do so with some expediency; if they keep their customers posted as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, on the other hand, an insurance firm has a reputation of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, you'll feel the sting later.