Subrogation is a term that's understood in insurance and legal circles but often not by the people they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your benefit to comprehend the steps of how it works. The more knowledgeable you are, the better decisions you can make about your insurance policy.

Any insurance policy you have is an assurance that, if something bad happens to you, the insurer of the policy will make good in a timely manner. If you get hurt at work, your company's workers compensation 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 sometimes a heavily involved affair – and time spent waiting in some cases compounds the damage to the victim – insurance firms usually decide to pay up front and figure out the blame afterward. They then need a mechanism to regain the costs if, when all the facts are laid out, they weren't actually responsible for the expense.

Can You Give an Example?

Your stove catches fire and causes $10,000 in home damages. Luckily, you have property insurance and it pays for the repairs. 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 accountable for the loss. The house has already been repaired in the name of expediency, but your insurance firm is out all that money. What does the firm do next?

How Subrogation Works

This is where subrogation comes in. It is the method that an insurance company uses to claim payment 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. Normally, only you can sue for damages done to your self or property. But under subrogation law, your insurance company is given 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 insurance company 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 timid on any subrogation case it might not win, it might choose to recoup its costs by boosting your premiums. On the other hand, if it knows which cases it is owed and goes after them efficiently, 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 half your deductible back, based on the laws in most states.

Moreover, 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 car accident attorney Powder Springs GA, successfully press a subrogation case, it will recover your expenses as well as its own.

All insurance companies are not created equal. When comparing, it's worth looking at the reputations of competing agencies to find out if they pursue legitimate subrogation claims; if they resolve those claims without dragging their feet; if they keep their accountholders updated as the case continues; and if they then process successfully won reimbursements right away so that you can get your losses back and move on with your life. If, instead, an insurer has a record of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, you should keep looking.