Subrogation is a term that's understood among legal and insurance firms but rarely by the customers they represent. Even if you've never heard the word before, it would be in your self-interest to understand an overview of the process. The more you know about it, the more likely it is that relevant proceedings will work out favorably.

Every insurance policy you own is a promise that, if something bad happens to you, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If you get injured at work, your employer's workers compensation picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.

But since figuring out who is financially accountable for services or repairs is usually a confusing affair – and time spent waiting sometimes compounds the damage to the policyholder – insurance firms in many cases opt to pay up front and assign blame after the fact. They then need a way to recover the costs if, in the end, they weren't in charge of the payout.

For Example

You rush into the hospital with a gouged finger. You hand the receptionist your health insurance card and he records your policy details. You get taken care of and your insurer is billed for the services. But the next day, when you get to your workplace – where the accident occurred – your boss hands you workers compensation forms to fill out. Your workers comp policy is in fact responsible for the expenses, not your health insurance company. The latter has an interest in recovering its costs in some way.

How Subrogation Works

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 companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Ordinarily, only you can sue for damages to your self or property. But under subrogation law, your insurer is extended some of your rights 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 Do I Need to Know This?

For a start, if you have a deductible, your insurer wasn't the only one 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 lax about bringing subrogation cases to court, it might choose to get back its costs by ballooning your premiums. On the other hand, if it knows which cases it is owed and pursues those cases efficiently, it is acting both in its own interests and in yours. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half culpable), you'll typically get half your deductible back, depending on the laws in your state.

Moreover, if the total expense of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as work accident attorney Whitewater, WI, successfully press a subrogation case, it will recover your expenses as well as its own.

All insurers are not created equal. When shopping around, it's worth looking at the reputations of competing firms to evaluate if they pursue legitimate subrogation claims; if they do so without delay; if they keep their clients advised as the case continues; and if they then process successfully won reimbursements immediately so that you can get your deductible 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 protecting its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.