Subrogation is a concept that's well-known in insurance and legal circles but often not by the customers who employ them. Even if you've never heard the word before, it would be in your benefit to know an overview of how it works. The more information you have, the more likely relevant proceedings will work out favorably.

Every insurance policy you hold is an assurance that, if something bad occurs, the insurer of the policy will make good in one way or another without unreasonable delay. If you get an injury on the job, 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 often increases the damage to the victim – insurance firms in many cases decide to pay up front and assign blame later. 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?

You are in a vehicle accident. Another car crashed into yours. Police are called, you exchange insurance details, and you go on your way. You have comprehensive insurance and file a repair claim. Later police tell the insurance companies that the other driver was to blame and his insurance should have paid for the repair of your car. How does your company get its funds back?

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. Under ordinary circumstances, only you can sue for damages to your person or property. But under subrogation law, your insurer is given some of your rights in exchange for having taken care of 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 the Insured?

For a start, if you have a deductible, it wasn't just your insurer that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – namely, $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to recoup its costs by boosting your premiums. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is doing you a favor as well as itself. If all of the money is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half accountable), you'll typically get half your deductible back, depending on the laws in your state.

In addition, if the total expense of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as criminal law defense attorney Portland OR, pursue subrogation and wins, it will recover your costs as well as its own.

All insurers are not the same. When comparing, it's worth contrasting the records of competing companies to find out whether they pursue legitimate subrogation claims; if they resolve those claims without dragging their feet; if they keep their customers informed as the case proceeds; 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, on the other hand, an insurance firm has a record of paying out claims that aren't its responsibility and then covering its profitability by raising your premiums, even attractive rates won't outweigh the eventual headache.