Subrogation is a term that's understood in insurance and legal circles but sometimes not by the customers they represent. Even if it sounds complicated, it would be in your self-interest to know the nuances of the process. The more knowledgeable you are, the better decisions you can make with regard to your insurance company.

An insurance policy you own is a promise that, if something bad happens to you, the company that covers the policy will make good without unreasonable delay. If you get hurt while working, your company's workers compensation agrees to pay for medical services. Employment lawyers handle the details; you just get fixed up.

But since determining who is financially responsible for services or repairs is often a tedious, lengthy affair – and time spent waiting sometimes increases the damage to the victim – insurance firms often opt to pay up front and assign blame afterward. They then need a means to get back the costs if, when all is said and done, they weren't actually responsible for the payout.

For Example

You arrive at the doctor's office with a gouged finger. You hand the receptionist your medical insurance card and he records your plan details. You get stitched up and your insurance company gets a bill for the services. But the next day, when you clock in at work – where the accident happened – your boss hands you workers compensation paperwork to file. Your workers comp policy is in fact responsible for the invoice, not your medical insurance. The latter has an interest in recovering its costs somehow.

How Does Subrogation Work?

This is where subrogation comes in. It is the way that an insurance company uses to claim payment 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. Ordinarily, only you can sue for damages to your person or property. But under subrogation law, your insurance company 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 Do I Need to Know This?

For a start, 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 lost some money too – namely, $1,000. If your insurance company is lax about bringing subrogation cases to court, it might choose to get back its losses by ballooning your premiums. On the other hand, if it has a competent legal team and pursues those cases aggressively, it is acting both in its own interests and in yours. If all is recovered, you will get your full thousand-dollar 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.

Moreover, if the total price of an accident is more than your maximum coverage amount, you may have had to pay the difference, which can be extremely expensive. If your insurance company or its property damage lawyers, such as workers compensation law Paddock Lake, WI, pursue subrogation and wins, it will recover your expenses as well as its own.

All insurance companies are not the same. When comparing, it's worth measuring the reputations of competing firms to determine whether they pursue winnable subrogation claims; if they resolve those claims without dragging their feet; if they keep their customers informed as the case continues; and if they then process successfully won reimbursements quickly so that you can get your money back and move on with your life. If, on the other hand, an insurance company has a record of paying out claims that aren't its responsibility and then protecting its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.