Subrogation is a term that's understood in legal and insurance circles but rarely by the policyholders they represent. Even if it sounds complicated, it is in your benefit to understand the steps of the process. The more information you have about it, the more likely an insurance lawsuit will work out favorably.

Every insurance policy you have is a commitment that, if something bad happens to you, the insurer of the policy will make good in a timely fashion. If you get hurt at work, for instance, your company's workers compensation picks up the tab 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 typically a tedious, lengthy affair – and time spent waiting sometimes increases the damage to the victim – insurance companies often opt to pay up front and figure out the blame later. They then need a mechanism to regain the costs if, ultimately, they weren't actually responsible for the payout.

Let's Look at an Example

Your bedroom catches fire and causes $10,000 in home damages. Luckily, 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 reasonable possibility that a judge would find him responsible for the damages. The house has already been repaired in the name of expediency, but your insurance agency is out all that money. What does the agency 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. Usually, only you can sue for damages to your person or property. But under subrogation law, your insurer is given 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 Does This Matter to Me?

For a start, if you have 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 be precise, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to recoup its losses by upping your premiums. On the other hand, if it knows which cases it is owed and goes after those cases efficiently, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found one-half culpable), you'll typically get $500 back, based on the laws in most states.

In addition, if the total price 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 immigration lawyer near me South Jordon UT, 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 at the reputations of competing firms to determine whether they pursue legitimate subrogation claims; if they do so with some expediency; if they keep their policyholders updated as the case proceeds; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, instead, an insurance firm has a reputation of honoring claims that aren't its responsibility and then covering its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.