Subrogation is an idea that's understood in legal and insurance circles but rarely by the policyholders they represent. Even if you've never heard the word before, it is in your benefit to comprehend the nuances of the process. The more knowledgeable you are, the more likely it is that an insurance lawsuit will work out favorably.

Every insurance policy you own is a commitment that, if something bad occurs, the business on the other end of the policy will make restitutions without unreasonable delay. If you get injured while working, your employer's workers compensation insurance 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 heavily involved affair – and time spent waiting in some cases compounds the damage to the policyholder – insurance firms in many cases decide to pay up front and figure out the blame after the fact. They then need a mechanism to recoup the costs if, when all the facts are laid out, they weren't actually responsible for the payout.

Let's Look at an Example

You are in a vehicle accident. Another car ran 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 to blame and her insurance policy 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 way that an insurance company uses to claim reimbursement 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 self or property. But under subrogation law, your insurer is extended some of your rights for making good on 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 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 lost some money too – to be precise, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might choose to recover its expenses by boosting your premiums and call it a day. On the other hand, if it has a competent legal team and goes after them enthusiastically, 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 one-half culpable), you'll typically get $500 back, based on the laws in most states.

Furthermore, if the total price of an accident is more than your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as criminal defense lawyer Portland OR, successfully press a subrogation case, it will recover your losses as well as its own.

All insurance agencies are not the same. When shopping around, it's worth weighing the reputations of competing companies to find out whether they pursue valid subrogation claims; if they resolve those claims without delay; if they keep their customers updated as the case goes on; and if they then process successfully won reimbursements right away so that you can get your money 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 profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.