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Subrogation is a concept that's understood among legal and insurance companies but often not by the customers who hire them. Even if it sounds complicated, it would be to your advantage to know the steps of how it works. The more knowledgeable you are, the better decisions you can make about your insurance policy.

An insurance policy you own is a promise that, if something bad happens to you, the business that covers the policy will make restitutions in one way or another in a timely manner. If your vehicle is hit, insurance adjusters (and police, when necessary) decide who was at fault and that person's insurance covers the damages.

But since determining who is financially responsible for services or repairs is usually a heavily involved affair – and delay in some cases compounds the damage to the policyholder – insurance companies usually decide to pay up front and figure out the blame later. They then need a method to get back the costs if, once the situation is fully assessed, they weren't responsible for the expense.

Let's Look at an Example

You are in a car accident. Another car crashed into yours. The police show up to assess the situation, you exchange insurance details, and you go on your way. You have comprehensive insurance and file a repair claim. Later it's determined that the other driver was at fault and his insurance policy should have paid for the repair of your car. How does your insurance company get its money back?

How Does Subrogation Work?

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. 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 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.

Why Should I Care?

For starters, if you have 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 be precise, $1,000. If your insurer is timid on any subrogation case it might not win, it might choose to recoup its expenses by upping your premiums. On the other hand, if it knows which cases it is owed and goes after those cases aggressively, it is acting both in its own interests and in yours. 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 responsible), you'll typically get $500 back, depending on the laws in your state.

In addition, 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 car accident attorney Powder Springs GA, successfully press a subrogation case, it will recover your losses as well as its own.

All insurance companies are not created equal. When shopping around, it's worth contrasting the records of competing agencies to find out if they pursue valid subrogation claims; if they do so without dragging their feet; if they keep their policyholders apprised 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, instead, an insurance agency has a record of paying out claims that aren't its responsibility and then protecting its profit margin by raising your premiums, even attractive rates won't outweigh the eventual headache.