Subrogation is a concept that's well-known among insurance and legal companies but rarely by the people who hire them. Even if it sounds complicated, it would be to your advantage to understand the nuances of how it works. The more information you have, the better decisions you can make with regard to your insurance policy.

Any insurance policy you hold is an assurance that, if something bad happens to you, the company that insures the policy will make restitutions in one way or another without unreasonable delay. If you get hurt while you're on the clock, for instance, your company's workers compensation insurance picks up the tab for medical services. Employment lawyers handle the details; you just get fixed up.

But since figuring out who is financially responsible for services or repairs is usually a time-consuming affair – and delay sometimes increases the damage to the policyholder – insurance companies often decide to pay up front and figure out the blame afterward. They then need a path to get back the costs if, when there is time to look at all the facts, they weren't in charge of the expense.

Can You Give an Example?

You head to the doctor's office with a gouged finger. You give the receptionist your medical insurance card and she takes down your policy details. You get stitches and your insurance company is billed for the medical care. But the next day, when you arrive at your workplace – where the accident happened – you are given workers compensation paperwork to fill out. Your employer's workers comp policy is actually responsible for the hospital visit, 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 companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Usually, only you can sue for damages to your person or property. But under subrogation law, your insurance company is extended some of your rights in exchange for having taken care of 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 one thing, if your insurance policy stipulated a deductible, it wasn't just your insurance company that had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to the tune of $1,000. If your insurer is lax about bringing subrogation cases to court, it might opt to recover its expenses by increasing your premiums and call it a day. On the other hand, if it has a competent legal team and pursues those cases efficiently, it is acting both in its own interests and in yours. If all ten grand 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 responsible), you'll typically get half your deductible back, based on the laws in most states.

In addition, if the total loss of an accident is over your maximum coverage amount, you may have had to pay the difference. If your insurance company or its property damage lawyers, such as car accident attorney Lithia springs GA, pursue subrogation and wins, it will recover your costs as well as its own.

All insurers are not the same. When comparing, it's worth weighing the reputations of competing firms to evaluate whether they pursue valid subrogation claims; if they do so in a reasonable amount of time; if they keep their policyholders posted as the case goes on; and if they then process successfully won reimbursements quickly so that you can get your deductible back and move on with your life. If, on the other hand, an insurance firm has a record of honoring claims that aren't its responsibility and then protecting its income by raising your premiums, even attractive rates won't outweigh the eventual headache.