Subrogation is a concept that's well-known 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 comprehend the steps of how it works. The more knowledgeable you are about it, the more likely relevant proceedings will work out favorably.

Any insurance policy you own is an assurance that, if something bad occurs, the company on the other end of the policy will make restitutions in a timely fashion. If a windstorm damages your house, your property insurance agrees to compensate you or facilitate the repairs, subject to state property damage laws.

But since determining who is financially responsible for services or repairs is often a time-consuming affair – and time spent waiting in some cases compounds the damage to the policyholder – insurance companies often decide to pay up front and assign blame after the fact. They then need a method to recoup the costs if, in the end, they weren't actually responsible for the payout.

For Example

You are in a vehicle accident. Another car ran into yours. The police show up to assess the situation, you exchange insurance details, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later it's determined that the other driver was to blame and her insurance policy should have paid for the repair of your auto. How does your insurance company get its funds back?

How Does Subrogation Work?

This is where subrogation comes in. It is the way that an insurance company uses to claim payment after it has paid for something that should have been paid by some other entity. 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 person or property. But under subrogation law, your insurance company 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 one thing, if you have a deductible, your insurance company wasn't the only one 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 timid on any subrogation case it might not win, it might opt to get back its losses by raising your premiums and call it a day. On the other hand, if it has a proficient legal team and goes after those cases efficiently, it is doing you a favor as well as itself. 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 50 percent at fault), you'll typically get half your deductible back, depending on the laws in your state.

In addition, if the total loss of an accident is over 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 lithia springs ga, successfully press a subrogation case, it will recover your losses as well as its own.

All insurance companies are not the same. When shopping around, it's worth looking up the reputations of competing firms to find out if they pursue legitimate subrogation claims; if they do so quickly; if they keep their clients informed as the case continues; and if they then process successfully won reimbursements immediately so that you can get your money 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 protecting its income by raising your premiums, even attractive rates won't outweigh the eventual headache.