Subrogation is a concept that's well-known among legal and insurance firms but often not by the policyholders they represent. Even if you've never heard the word before, it would be to your advantage to know the steps of how it works. The more information you have, the more likely relevant proceedings will work out favorably.

Every insurance policy you have is an assurance that, if something bad happens to you, the insurer of the policy will make restitutions without unreasonable delay. If your real estate suffers fire damage, your property insurance agrees to pay you or pay for the repairs, subject to state property damage laws.

But since ascertaining who is financially accountable for services or repairs is often a tedious, lengthy affair – and time spent waiting often compounds the damage to the victim – insurance firms often opt to pay up front and figure out the blame after the fact. They then need a mechanism to regain the costs if, when all is said and done, they weren't in charge of the payout.

Can You Give an Example?

Your living room catches fire and causes $10,000 in house damages. Happily, you have property insurance and it pays out your claim in full. However, in its investigation it discovers that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him responsible for the damages. The house has already been fixed up in the name of expediency, but your insurance agency is out $10,000. What does the agency do next?

How Does Subrogation Work?

This is where subrogation comes in. It is the method 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. Usually, only you can sue for damages done to your self or property. But under subrogation law, your insurer is extended some of your rights in exchange for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.

Why Do I Need to Know This?

For a start, if your insurance policy stipulated a deductible, it wasn't just your insurer who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to be precise, $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to recoup its expenses by raising your premiums and call it a day. On the other hand, if it has a competent legal team and pursues them efficiently, it is acting both in its own interests and in yours. If all of the money is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half accountable), you'll typically get half your deductible back, depending on the laws in your state.

Additionally, if the total price of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as Probate Litigation Lawyer Decatur TX, successfully press a subrogation case, it will recover your costs as well as its own.

All insurers are not the same. When shopping around, it's worth measuring the reputations of competing agencies to determine whether they pursue legitimate subrogation claims; if they do so without dragging their feet; if they keep their accountholders advised as the case goes on; 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 honoring claims that aren't its responsibility and then covering its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.