Subrogation is a term that's well-known among legal and insurance firms but often not by the policyholders they represent. Even if you've never heard the word before, it would be in your benefit to know the nuances of how it works. The more information you have, the more likely it is that an insurance lawsuit will work out in your favor.

An insurance policy you have is an assurance that, if something bad occurs, the company on the other end of the policy will make good in one way or another in a timely manner. If your house is robbed, your property insurance agrees to pay you or pay for the repairs, subject to state property damage laws.

But since figuring out who is financially responsible for services or repairs is usually a time-consuming 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 assign blame afterward. They then need a way to recover the costs if, ultimately, they weren't responsible for the expense.

For Example

You arrive at the emergency room with a sliced-open finger. You give the receptionist your health insurance card and she takes down your policy details. You get taken care of and your insurer gets a bill for the services. But the next afternoon, when you clock in at your place of employment – where the injury occurred – you are given workers compensation forms to file. Your employer's workers comp policy is actually responsible for the invoice, not your health insurance company. The latter has an interest in recovering its costs somehow.

How Does Subrogation Work?

This is where subrogation comes in. It is the process 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. Under ordinary circumstances, only you can sue for damages to your person or property. But under subrogation law, your insurer is extended some of your rights in exchange for making good on the damages. It can go after the money that was originally due to you, because it has covered the amount already.

How Does This Affect the Insured?

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 get back its expenses by ballooning your premiums. On the other hand, if it has a proficient legal team and pursues them efficiently, it is doing you a favor as well as itself. If all of the money 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 at fault), you'll typically get half your deductible back, depending on the laws in your state.

Additionally, if the total loss 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 injury claims Puyallup, WA, successfully press a subrogation case, it will recover your costs as well as its own.

All insurers are not the same. When shopping around, it's worth comparing the records of competing firms to evaluate if they pursue legitimate subrogation claims; if they do so without delay; if they keep their accountholders advised as the case proceeds; 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 agency has a record of paying out claims that aren't its responsibility and then safeguarding its income by raising your premiums, you should keep looking.

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