Subrogation is a concept that's understood in legal and insurance circles but sometimes not by the customers who hire them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your benefit to comprehend an overview of the process. The more you know, the more likely relevant proceedings will work out in your favor.

Every insurance policy you own is an assurance that, if something bad happens to you, the insurer of the policy will make good without unreasonable delay. If your vehicle is hit, insurance adjusters (and police, when necessary) determine who was at fault and that person's insurance covers the damages.

But since ascertaining who is financially accountable for services or repairs is usually a confusing affair – and delay sometimes increases the damage to the policyholder – insurance companies usually opt to pay up front and assign blame after the fact. They then need a path to regain the costs if, in the end, they weren't actually responsible for the payout.

Can You Give an Example?

Your garage catches fire and causes $10,000 in house damages. Luckily, you have property insurance and it pays out your claim in full. However, the assessor assigned to your case finds out that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him responsible for the loss. You already have your money, but your insurance agency is out ten grand. What does the agency do next?

How Subrogation Works

This is where subrogation comes in. It is the method that an insurance company uses to claim payment 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 self or property. But under subrogation law, your insurer is given 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.

Why Do I Need to Know This?

For one thing, if your insurance policy stipulated a deductible, your insurer wasn't the only one that 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 opt to get back its losses by raising your premiums. On the other hand, if it has a capable legal team and pursues them efficiently, it is doing you a favor as well as itself. If all ten grand is recovered, you will get your full 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.

Furthermore, if the total loss 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 Lawyers serving bonney lake wa, successfully press a subrogation case, it will recover your expenses as well as its own.

All insurers are not the same. When comparing, it's worth looking at the records of competing companies to determine whether they pursue winnable subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their policyholders posted 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 record of paying out claims that aren't its responsibility and then protecting its profitability by raising your premiums, you'll feel the sting later.