Subrogation is a term that's well-known among insurance and legal companies but often not by the customers who hire them. Even if you've never heard the word before, it is in your benefit to understand an overview of the process. The more information you have, the more likely it is that an insurance lawsuit will work out in your favor.

Every insurance policy you hold is a promise that, if something bad occurs, the business on the other end of the policy will make good in a timely fashion. If you get hurt at work, for example, your employer's workers compensation agrees to pay 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 regularly a confusing affair – and time spent waiting sometimes increases the damage to the policyholder – insurance companies often opt to pay up front and assign blame afterward. They then need a path to regain the costs if, in the end, they weren't actually in charge of the payout.

Can You Give an Example?

You go to the Instacare with a gouged finger. You hand the receptionist your medical insurance card and she records your coverage information. You get taken care of and your insurance company gets an invoice for the tab. But on the following day, when you clock in at your place of employment – where the accident occurred – you are given workers compensation paperwork to file. Your company's workers comp policy is in fact responsible for the bill, not your medical insurance company. It has a vested interest in getting that money back somehow.

How Does Subrogation Work?

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 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 done to your person or property. But under subrogation law, your insurance company is given some of your rights for making good on 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 have a stake in the outcome as well – namely, $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to recover its losses by upping your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and pursues them aggressively, it is acting both in its own interests and in yours. 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 at fault), you'll typically get $500 back, depending on your state laws.

Additionally, if the total cost of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as personal injury claims Marietta, GA, pursue subrogation and wins, it will recover your expenses in addition to its own.

All insurance agencies are not the same. When comparing, it's worth scrutinizing the records of competing agencies to determine if they pursue legitimate subrogation claims; if they do so quickly; if they keep their policyholders posted 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 paying out claims that aren't its responsibility and then safeguarding its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.