Subrogation is a concept that's understood among insurance and legal professionals but sometimes not by the people who employ them. Even if you've never heard the word before, it would be in your benefit to comprehend the nuances of the process. The more knowledgeable you are, 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 company on the other end of the policy will make good in a timely manner. If your vehicle is hit, insurance adjusters (and police, when necessary) determine who was at fault and that person's insurance pays out.

But since ascertaining who is financially responsible for services or repairs is usually a time-consuming affair – and delay in some cases adds to the damage to the policyholder – insurance companies usually decide to pay up front and figure out the blame after the fact. They then need a way to recoup the costs if, when there is time to look at all the facts, they weren't in charge of the payout.

Let's Look at an Example

You are in a car accident. Another car crashed into yours. Police are called, you exchange insurance details, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later it's determined that the other driver was entirely at fault and her insurance policy should have paid for the repair of your auto. 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 after it has paid for something that should have been paid by some other entity. 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. Usually, only you can sue for damages done to your person or property. But under subrogation law, your insurance company is considered to have some of your rights 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.

How Does This Affect Me?

For one thing, if your insurance policy stipulated 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 insurance company is timid on any subrogation case it might not win, it might choose to recoup its losses by raising your premiums and call it a day. On the other hand, if it has a capable legal team and goes after them efficiently, 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 at fault), you'll typically get half your deductible back, based on the laws in most states.

Moreover, 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 defense attorney Portland OR, pursue subrogation and succeeds, it will recover your losses in addition to its own.

All insurance agencies are not the same. When shopping around, it's worth measuring the reputations of competing agencies to evaluate if they pursue legitimate subrogation claims; if they do so quickly; if they keep their customers informed as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your deductible 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 safeguarding its bottom line by raising your premiums, even attractive rates won't outweigh the eventual headache.