Subrogation is a concept that's understood among legal and insurance firms but rarely by the customers who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it is in your benefit to comprehend an overview of how it works. The more information you have about it, the more likely relevant proceedings will work out favorably.

Any insurance policy you have is a commitment that, if something bad happens to you, the company that covers the policy will make restitutions in a timely manner. If you get hurt on the job, for instance, your company's workers compensation agrees to pay 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 regularly a time-consuming affair – and delay in some cases increases the damage to the policyholder – insurance companies in many cases decide to pay up front and assign blame afterward. They then need a method to get back the costs if, when all is said and done, they weren't actually responsible for the payout.

For Example

You head to the Instacare with a gouged finger. You hand the receptionist your medical insurance card and he writes down your policy details. You get stitched up and your insurance company gets a bill for the services. But the next morning, when you arrive at work – where the accident occurred – you are given workers compensation paperwork to file. Your employer's workers comp policy is in fact responsible for the payout, not your medical insurance policy. It has a vested interest in getting that money back somehow.

How Does Subrogation Work?

This is where subrogation comes in. It is the method that an insurance company uses to claim payment 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 to your person or property. But under subrogation law, your insurance company is given some of your rights in exchange 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 Does This Matter to Me?

For a start, if you have 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 – namely, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recoup its expenses by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is acting both in its own interests and in yours. If all $10,000 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, depending on your state laws.

In addition, if the total price of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely costly. If your insurance company or its property damage lawyers, such as work accident attorney Paddock Lake, WI, 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 measuring the records of competing companies to determine whether they pursue valid subrogation claims; if they do so without delay; if they keep their policyholders posted as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, on the other hand, an insurer has a record of honoring claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you'll feel the sting later.