Subrogation is a concept that's understood among legal and insurance companies but sometimes not by the customers they represent. Even if you've never heard the word before, it is to your advantage to comprehend the nuances of the process. The more knowledgeable you are, the better decisions you can make about your insurance policy.

Every insurance policy you hold is a promise that, if something bad occurs, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If you get hurt while you're on the clock, your company's workers compensation insurance 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 typically a confusing affair – and delay in some cases increases the damage to the victim – insurance firms usually opt to pay up front and assign blame after the fact. They then need a path to get back the costs if, once the situation is fully assessed, they weren't actually responsible for the payout.

Can You Give an Example?

You rush into the Instacare with a gouged finger. You hand the receptionist your health insurance card and she takes down your plan information. You get stitched up and your insurance company gets a bill for the tab. But on the following day, when you arrive at your place of employment – where the accident happened – 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. It has a vested interest in getting that money back somehow.

How Subrogation Works

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. Ordinarily, only you can sue for damages to your person or property. But under subrogation law, your insurance company is considered to have 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 Policyholders?

For one thing, 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 be precise, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its costs by ballooning your premiums. On the other hand, if it knows which cases it is owed and pursues those cases enthusiastically, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found 50 percent responsible), you'll typically get $500 back, based on the laws in most states.

Moreover, if the total price of an accident is more than 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 family law services Tumwater, WA, successfully press a subrogation case, it will recover your losses as well as its own.

All insurance companies are not created equal. When comparing, it's worth weighing the records of competing firms to determine if they pursue winnable subrogation claims; if they do so fast; if they keep their accountholders updated as the case proceeds; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, instead, an insurer has a reputation of paying out claims that aren't its responsibility and then covering its bottom line by raising your premiums, you'll feel the sting later.