Subrogation is a concept that's well-known in insurance and legal circles but sometimes not by the policyholders who hire them. Even if it sounds complicated, it would be to your advantage to comprehend the steps of the process. The more knowledgeable you are about it, the better decisions you can make about your insurance policy.

Any insurance policy you hold is a promise that, if something bad occurs, the insurer of the policy will make restitutions in a timely manner. If your vehicle is hit, insurance adjusters (and the courts, when necessary) decide who was at fault and that person's insurance pays out.

But since determining who is financially responsible for services or repairs is regularly a heavily involved affair – and delay often compounds the damage to the policyholder – insurance companies usually decide to pay up front and assign blame after the fact. They then need a path to recover the costs if, when all is said and done, they weren't responsible for the expense.

Can You Give an Example?

You head to the hospital with a sliced-open finger. You give the receptionist your medical insurance card and he writes down your plan information. You get stitched up and your insurance company is billed for the medical care. But the next morning, when you clock in at your workplace – where the accident occurred – your boss hands you workers compensation forms to file. Your company's workers comp policy is actually responsible for the bill, 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 method that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. 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 person or property. But under subrogation law, your insurance company is considered to have some of your rights in exchange for making good on the damages. It can go after the money originally due to you, because it has covered the amount already.

How Does This Affect Policyholders?

For a start, if your insurance policy stipulated a deductible, it wasn't just your insurance company who 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 opt to get back its losses by raising your premiums and call it a day. On the other hand, if it knows which cases it is owed and pursues those cases efficiently, it is acting both in its own interests and in yours. If all is recovered, you will get your full $1,000 deductible back. If it recovers half (for instance, in a case where you are found one-half responsible), you'll typically get $500 back, based on the laws in most states.

Moreover, if the total loss 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 legal representation Lacey, WA, pursue subrogation and succeeds, it will recover your costs in addition to its own.

All insurance agencies are not created equal. When comparing, it's worth scrutinizing the reputations of competing companies to find out if they pursue legitimate subrogation claims; if they do so without delay; if they keep their clients updated as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your losses back and move on with your life. If, on the other hand, an insurance agency has a reputation of honoring claims that aren't its responsibility and then covering its profit margin by raising your premiums, you should keep looking.