Subrogation is a term that's understood in insurance and legal circles but rarely by the customers they represent. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your benefit to understand the steps of the process. The more information you have about it, the more likely it is that relevant proceedings will work out favorably.

Any insurance policy you have is a promise that, if something bad occurs, the company on the other end of the policy will make restitutions in a timely fashion. If your property is robbed, your property insurance steps in to remunerate you or pay for the repairs, subject to state property damage laws.

But since determining who is financially accountable for services or repairs is typically a time-consuming affair – and time spent waiting sometimes increases the damage to the victim – insurance companies in many cases decide to pay up front and assign blame afterward. They then need a means to recoup the costs if, ultimately, they weren't in charge of the expense.

Can You Give an Example?

You arrive at the emergency room with a sliced-open finger. You give the nurse your health insurance card and he takes down your coverage information. You get stitches and your insurance company is billed for the services. But on the following morning, when you arrive at your workplace – where the injury happened – you are given workers compensation paperwork to file. Your company's workers comp policy is actually responsible for the invoice, not your health insurance policy. The latter has a right to recover its money somehow.

How Does Subrogation Work?

This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement 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 self or property. But under subrogation law, your insurance company is given 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.

Why Should I Care?

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 have a stake in the outcome as well – to the tune of $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its losses by ballooning 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 acting both in its own interests and in yours. If all of the money is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent accountable), you'll typically get $500 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 criminal defense attorney services Vancouver WA, pursue subrogation and wins, it will recover your losses as well as its own.

All insurance agencies are not the same. When shopping around, it's worth measuring the records of competing firms to evaluate if they pursue legitimate subrogation claims; if they resolve those claims quickly; if they keep their accountholders apprised as the case continues; and if they then process successfully won reimbursements right away so that you can get your money back and move on with your life. If, instead, an insurance agency has a reputation of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, even attractive rates won't outweigh the eventual headache.