Subrogation is an idea that's well-known in legal and insurance circles but rarely by the customers who hire them. Even if it sounds complicated, it is in your self-interest to understand an overview of the process. The more knowledgeable you are about it, the better decisions you can make with regard to your insurance policy.

Every insurance policy you hold is a promise that, if something bad occurs, the company that covers the policy will make good without unreasonable delay. If a fire damages your house, your property insurance agrees to repay you or enable the repairs, subject to state property damage laws.

But since determining who is financially responsible for services or repairs is usually a heavily involved affair – and delay in some cases increases the damage to the policyholder – insurance companies often 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 is said and done, they weren't actually in charge of the payout.

Let's Look at an Example

You go to the Instacare with a sliced-open finger. You give the nurse your medical insurance card and she takes down your coverage information. You get stitched up and your insurance company gets an invoice for the medical care. But on the following morning, when you arrive at work – where the injury happened – you are given workers compensation paperwork to file. Your employer's workers comp policy is actually responsible for the payout, not your medical insurance. The latter has an interest in recovering its money somehow.

How Subrogation Works

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 companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Under ordinary circumstances, only you can sue for damages to your self or property. But under subrogation law, your insurance company 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.

How Does This Affect Individuals?

For a start, if your insurance policy stipulated a deductible, your insurance company wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to the tune of $1,000. If your insurance company is timid on any subrogation case it might not win, it might opt to recover its expenses by boosting your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases enthusiastically, 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 to blame), you'll typically get half your deductible back, depending on your state laws.

Additionally, 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 Law office near bonney lake washington, pursue subrogation and succeeds, it will recover your costs as well as its own.

All insurers are not created equal. When comparing, it's worth looking up the reputations of competing agencies to determine if they pursue legitimate subrogation claims; if they do so in a reasonable amount of time; if they keep their clients advised as the case goes on; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, instead, an insurance company has a record of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, you should keep looking.