Subrogation is a concept that's understood among insurance and legal firms but rarely by the people who employ 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 the steps of the process. The more you know, the more likely an insurance lawsuit will work out favorably.

Every insurance policy you hold is a commitment that, if something bad occurs, the company on the other end of the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is hit, insurance adjusters (and police, when necessary) determine who was at fault and that party's insurance covers the damages.

But since figuring out who is financially responsible for services or repairs is sometimes a confusing affair – and time spent waiting in some cases compounds the damage to the victim – insurance companies often opt to pay up front and assign blame later. They then need a path to regain the costs if, once the situation is fully assessed, they weren't actually responsible for the expense.

Can You Give an Example?

Your kitchen 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 decent chance that a judge would find him to blame for the damages. The home has already been repaired in the name of expediency, but your insurance firm is out ten grand. What does the firm do next?

How Does Subrogation Work?

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 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 self or property. But under subrogation law, your insurer is considered to have 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.

How Does This Affect Me?

For starters, if you have a deductible, your insurer wasn't the only one that had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its costs by raising your premiums. On the other hand, if it has a knowledgeable legal team and pursues them enthusiastically, it is acting both in its own interests and in yours. If all $10,000 is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found 50 percent culpable), you'll typically get $500 back, based on the laws in most states.

Additionally, if the total loss of an accident is over 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 employment lawyer University Place WA, successfully press a subrogation case, it will recover your expenses in addition to its own.

All insurance agencies are not created equal. When comparing, it's worth examining the reputations of competing companies to find out if they pursue valid subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their clients updated as the case continues; and if they then process successfully won reimbursements immediately so that you can get your funding 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, you'll feel the sting later.