Subrogation is a concept that's understood among insurance and legal firms but often not by the people they represent. Even if it sounds complicated, it is to your advantage to understand the steps of the process. The more information you have, the better decisions you can make with regard to your insurance company.

Any insurance policy you have is an assurance that, if something bad happens to you, the business on the other end of the policy will make restitutions in one way or another in a timely fashion. If a storm damages your real estate, your property insurance steps in to repay you or enable the repairs, subject to state property damage laws.

But since figuring out who is financially accountable for services or repairs is usually a confusing affair – and delay in some cases compounds the damage to the policyholder – insurance companies often opt to pay up front and assign blame later. They then need a way to recover the costs if, ultimately, they weren't actually responsible for the expense.

For Example

You are in an auto accident. Another car crashed 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 should have paid for the repair of your car. How does your company get its funds back?

How Subrogation Works

This is where subrogation comes in. It is the process that an insurance company uses to claim reimbursement after it has paid for something that should have been paid by some other entity. 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 done to your person or property. But under subrogation law, your insurance company is given some of your rights 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.

Why Does This Matter to Me?

For starters, if you have 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 – namely, $1,000. If your insurer is unconcerned with pursuing subrogation even when it is entitled, it might opt to get back its expenses by boosting your premiums. On the other hand, if it knows which cases it is owed and pursues them enthusiastically, it is doing you a favor as well as itself. If all of the money 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 half your deductible back, based on the laws in most states.

Moreover, 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 child custody lawyer Henderson Nv, pursue subrogation and wins, it will recover your losses as well as its own.

All insurers are not the same. When shopping around, it's worth contrasting the records of competing companies to determine whether they pursue valid subrogation claims; if they resolve those claims without dragging their feet; if they keep their accountholders informed as the case continues; 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 insurer has a record of honoring claims that aren't its responsibility and then covering its profit margin by raising your premiums, you'll feel the sting later.