Subrogation is a concept that's well-known among legal and insurance firms but sometimes not by the policyholders they represent. Even if it sounds complicated, it is in your self-interest to comprehend the steps of the process. The more knowledgeable you are, the more likely it is that an insurance lawsuit will work out in your favor.

An insurance policy you have is an assurance that, if something bad occurs, the business on the other end of the policy will make good without unreasonable delay. If you get hurt on the job, for example, your employer's workers compensation agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.

But since figuring out who is financially responsible for services or repairs is sometimes a heavily involved affair – and time spent waiting in some cases increases the damage to the victim – insurance firms usually opt to pay up front and figure out the blame afterward. They then need a method to recoup the costs if, ultimately, they weren't actually responsible for the payout.

For Example

You are in a vehicle accident. Another car ran into yours. Police are called, you exchange insurance information, and you go on your way. You have comprehensive insurance and file a repair claim. Later it's determined that the other driver was to blame and his insurance should have paid for the repair of your vehicle. 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 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. Under ordinary circumstances, only you can sue for damages to your person or property. But under subrogation law, your insurer 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.

Why Does This Matter to Me?

For starters, if your insurance policy stipulated a deductible, it wasn't just your insurer 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 recoup its losses by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them efficiently, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent to blame), you'll typically get half your deductible back, based on the laws in most states.

Additionally, if the total cost 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 Auto accident lawyer Powder Springs GA, successfully press a subrogation case, it will recover your losses in addition to its own.

All insurance agencies are not created equal. When comparing, it's worth contrasting the reputations of competing companies to find out whether they pursue winnable subrogation claims; if they resolve those claims without dragging their feet; if they keep their accountholders advised as the case proceeds; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, on the other hand, an insurer has a reputation of paying out claims that aren't its responsibility and then covering its bottom line by raising your premiums, you'll feel the sting later.