Subrogation is a term that's well-known among insurance and legal professionals but rarely by the customers they represent. Even if it sounds complicated, it is to your advantage to know an overview of the process. The more information you have, the better decisions you can make about your insurance policy.

Any insurance policy you hold is a promise that, if something bad happens to you, the insurer of the policy will make good in a timely fashion. If you get an injury on the job, your company's workers compensation insurance agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.

But since figuring out who is financially responsible for services or repairs is sometimes a tedious, lengthy affair – and time spent waiting sometimes adds to the damage to the policyholder – insurance companies usually opt to pay up front and assign blame after the fact. They then need a method to recover the costs if, in the end, they weren't in charge of the expense.

For Example

Your garage catches fire and causes $10,000 in house damages. Fortunately, you have property insurance and it pays out your claim in full. However, the insurance investigator finds out that an electrician had installed some faulty wiring, and there is reason to believe that a judge would find him accountable for the loss. The house has already been fixed up in the name of expediency, but your insurance company is out ten grand. What does the company do next?

How Does Subrogation Work?

This is where subrogation comes in. It is the way 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 to your self or property. But under subrogation law, your insurance company is given 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.

How Does This Affect Policyholders?

For starters, if your insurance policy stipulated 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 – to be precise, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recoup its expenses by upping your premiums and call it a day. On the other hand, if it has a proficient legal team and goes after them enthusiastically, it is acting both in its own interests and in yours. 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 to blame), you'll typically get $500 back, based on the laws in most states.

Furthermore, if the total loss of an accident is more than your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as patent infringement 77092, successfully press a subrogation case, it will recover your losses as well as its own.

All insurers are not created equal. When shopping around, it's worth comparing the reputations of competing agencies to determine whether they pursue legitimate subrogation claims; if they do so without delay; if they keep their customers posted as the case proceeds; 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 insurance firm has a reputation of paying out claims that aren't its responsibility and then safeguarding its profitability by raising your premiums, you should keep looking.