Subrogation is a concept that's understood among legal and insurance professionals but rarely by the customers who hire them. Rather than leave it to the professionals, it would be in your benefit to know the steps of the process. The more you know, the better decisions you can make about your insurance company.

An insurance policy you hold is a promise that, if something bad happens to you, the business that insures the policy will make good without unreasonable delay. If your vehicle is hit, insurance adjusters (and police, when necessary) decide who was to blame and that party's insurance covers the damages.

But since determining who is financially responsible for services or repairs is regularly a heavily involved affair – and time spent waiting often increases the damage to the policyholder – insurance firms in many cases decide to pay up front and figure out the blame later. They then need a mechanism to regain the costs if, in the end, they weren't in charge of the payout.

Let's Look at an Example

You are in a traffic-light accident. Another car collided with yours. The police show up to assess the situation, you exchange insurance information, and you go on your way. You have comprehensive insurance and file a repair claim. Later it's determined that the other driver was to blame and his insurance should have paid for the repair of your vehicle. How does your company get its funds back?

How Subrogation Works

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. 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 in exchange 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 Should I Care?

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 have a stake in the outcome as well – to the tune of $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to get back its losses by upping your premiums and call it a day. On the other hand, if it has a knowledgeable legal team and goes after them efficiently, it is acting both in its own interests and in yours. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half accountable), you'll typically get $500 back, depending on the laws in your state.

Additionally, 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 spendy. If your insurance company or its property damage lawyers, such as legal representation Rochester, WA, successfully press a subrogation case, it will recover your losses in addition to its own.

All insurance agencies are not created equal. When shopping around, it's worth researching the records of competing companies to determine if they pursue winnable subrogation claims; if they resolve those claims with some expediency; if they keep their clients advised as the case continues; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, on the other hand, an insurance agency has a reputation of paying out claims that aren't its responsibility and then covering its profitability by raising your premiums, you'll feel the sting later.