Subrogation is a term that's well-known in insurance and legal circles but sometimes not by the people who hire them. Even if you've never heard the word before, it would be in your self-interest to know an overview of the process. The more knowledgeable you are, the better decisions you can make about your insurance policy.

An insurance policy you own is a commitment that, if something bad happens to you, the business that covers the policy will make restitutions in one way or another in a timely manner. If you get hurt while you're on the clock, your company's workers compensation agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.

But since figuring out who is financially accountable for services or repairs is usually a heavily involved affair – and delay sometimes compounds 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 regain the costs if, in the end, they weren't in charge of the expense.

For Example

You are in a car accident. Another car crashed into yours. Police are called, you exchange insurance information, and you go on your way. You have comprehensive insurance and file a repair claim. Later police tell the insurance companies that the other driver was entirely to blame and his insurance should have paid for the repair of your auto. How does your company get its funds back?

How Does Subrogation Work?

This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement 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. Normally, 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 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 Should I Care?

For one thing, 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 have a stake in the outcome as well – to the tune of $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to recover its expenses by increasing your premiums. On the other hand, if it knows which cases it is owed and pursues them aggressively, it is acting both in its own interests and in yours. If all of the money 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, based on the laws in most states.

Additionally, 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 criminal law defense attorney Hillsboro OR, successfully press a subrogation case, it will recover your expenses as well as its own.

All insurance agencies are not created equal. When shopping around, it's worth looking at the reputations of competing firms to determine whether they pursue valid subrogation claims; if they resolve those claims in a reasonable amount of time; if they keep their clients apprised 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 insurance agency has a record of paying out claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you'll feel the sting later.