Subrogation is an idea that's well-known among insurance and legal professionals but sometimes not by the customers who employ them. If this term has come up when dealing with your insurance agent or a legal proceeding, it would be in your self-interest to understand the steps of the process. The more you know, the more likely it is that an insurance lawsuit will work out favorably.

Every insurance policy you have is a commitment that, if something bad happens to you, the business that insures the policy will make good in a timely fashion. If your vehicle is in a fender-bender, insurance adjusters (and police, when necessary) decide who was to blame and that person's insurance pays out.

But since figuring out who is financially accountable for services or repairs is regularly a tedious, lengthy affair – and time spent waiting often adds to the damage to the victim – insurance firms in many cases opt to pay up front and assign blame after the fact. They then need a means to get back the costs if, in the end, they weren't actually responsible for the expense.

For Example

You rush into the hospital with a gouged finger. You give the nurse your health insurance card and she takes down your policy details. You get stitches and your insurance company gets a bill for the services. But the next afternoon, when you arrive at work – where the injury happened – your boss hands you workers compensation forms to fill out. Your employer's workers comp policy is actually responsible for the costs, not your health insurance. It has a vested interest in getting that money back somehow.

How Does Subrogation Work?

This is where subrogation comes in. It is the process that an insurance company uses to claim payment after it has paid for something that should have been paid by some other entity. 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 insurance company is considered to have 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 you have a deductible, it wasn't just your insurance company 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 recoup its expenses by increasing your premiums and call it a day. On the other hand, if it has a competent legal team and pursues them aggressively, 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 50 percent accountable), you'll typically get half your deductible back, depending on the laws in your state.

In addition, if the total price 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 workers comp lawyer Columbus, ga, successfully press a subrogation case, it will recover your losses in addition to its own.

All insurers are not created equal. When comparing, it's worth looking up the reputations of competing firms to determine if they pursue valid subrogation claims; if they do so without dragging their feet; if they keep their customers advised as the case continues; and if they then process successfully won reimbursements quickly so that you can get your funding 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 covering its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.