What is insurance subrogation? —Forbes Advisor


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Car accidents happen, and often. When they do, the resulting expense can be astronomical.

Subrogation allows your insurance company to quickly pay your damages and then recover the money from the at-fault driver’s insurance company.

What is subrogation?

Subrogation gives insurance companies the right to seek compensation from the insurer of a person responsible for an accident. When a claim is subrogated, you give your insurance company the legal power to bring an action to recover the compensation it paid you after an accident. This allows your insurer to quickly pay your claim and then pursue action against the liable party to recover those funds.

Let’s say you are involved in an accident and the other driver is at fault. The other party’s car insurance company is usually responsible for covering the cost of repairs, medical bills and other expenses. If someone else is at fault after an accident, you can file a claim with their insurance. Or you can make a claim with your own insurance company, such as a collision damage waiver claim for damage to your vehicle.

Once your insurer pays the claim, they can file a subrogation claim to recover the funds that were paid. By using subrogation, the insurance company seeks to recover the money it paid out on claims (and your deductible) for accidents that were not your fault.

Subrogation claims are primarily filed against the other person’s insurance company. But if the driver at fault was uninsured at the time of the accident, your insurance company may try to sue the driver instead.

What is the purpose of subrogation?

The main purpose of subrogation is to provide you with quick and fair compensation following an accident. By using subrogation, your insurance company can ensure that your claim is processed in a timely manner and then have a way to recoup its costs.

How does subrogation work?

The process is simple for the policyholder. Insurance companies usually manage subrogation between themselves, behind the scenes.

Subrogation usually begins with one insurance company sending a letter of subrogation to the other insurance company and the liable party. This letter outlines the details of the claim, including the amount of the claim that was paid by the insurance company. From there, the insurance company will work with the other party’s insurance company or individual to process the subrogation claim.

Once the insurance company’s subrogation claim has been resolved, policyholders will receive letters advising them of the settlement. If you were not at fault and paid a deductible as part of the claim, that money may also be refunded as part of the subrogation settlement, depending on your state’s laws.

However, there may be instances where the insurance company fails to recover the full cost of the claim. If there are questions about who was at fault, or if the liable party’s policy limits are less than the cost of the claim, subrogation may result in partial reimbursement. If this happens, you may not receive a refund for your deductible.

In some cases, there may be disagreement over who was at fault or the amount of compensation that should have been paid. When this happens, insurance companies use a mediation process to resolve the dispute or, in some cases, go to court.

Examples of subrogation

Let’s take a look at a few scenarios that could end with your insurance company filing a subrogation claim against another party.

Let’s say you filed a collision insurance claim for damage to your vehicle after it was hit by another driver, who was responsible for the accident. Your insurance company will pay your claim and may decide to file a subrogation claim with the other person’s insurance company to recover the money.

Or let’s say you were crossing a green light at an intersection and an uninsured driver ran a red light and injured your neck. You could make a claim on your uninsured motorist coverage. Then your insurance company may decide to sue the driver to recover their losses.

What to expect during subrogation

The subrogation process differs depending on the person responsible for the accident. Although it is never ideal to be found liable for an accident, there may be instances in which it does occur and a subrogation claim may be filed against your insurance policy. Here’s what to expect in both scenarios.

When you are not at fault

The subrogation process is generally simple when you are not responsible for the accident. If your insurance company files a subrogation claim against another party, you will usually receive a letter or phone call about the claim from your insurance company. You can receive both. From there, the insurance company will take the initiative to work with the responsible party to obtain reimbursement for the damages.

Provided there are no extenuating circumstances, the claim will generally be resolved between the insurance company and the other party. Once this is done, your auto insurance company will notify you that the claim has been resolved. If you paid a deductible, you may also receive a reimbursement check for that amount.

Some subrogation claims can be more complicated, especially if the other party denies liability or is underinsured. In these cases, you may need to provide more information to your insurance company to help resolve the claim.

When you’re at fault

If you are responsible for the accident, your insurance company will pay for a subrogation claim. You may receive a letter informing you of the subrogation request from the other party’s insurance company, your insurance company, or both. If you receive a letter from the other party’s insurance company, you should make sure to let your insurer know so they can handle the claim internally.

Generally, the subrogation claim will be paid for by your insurance company and you will have little to do with the process. If you have questions about the accident and who is responsible for the damage, you may need to provide more information to your insurance company. Or, if the insurance companies cannot come to an agreement on the claim, legal action can be taken to resolve it.

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Subrogation FAQs

What are the benefits of subrogation?

There are a few different benefits of subrogation. For starters, the insurance company is able to expedite your claim payment, allowing you to get your car repaired or pay your medical bills in a timely manner.

Subrogation may result in obtaining your auto insurance deductible reimbursement, which reduces your accident-related expenses. And by recovering the money from the claim, the insurance company is in a better financial position to prevent your premiums from increasing.

What is a waiver of subrogation?

A waiver of subrogation is a document that prevents your insurance company from using subrogation to obtain reimbursement of claims payments from the responsible party. You may be asked to sign this waiver as part of a settlement agreement with the liable party.

By signing this waiver, you prevent your insurance company from recouping any money they paid for a claim for damages caused by the other party, so it’s always a good idea to discuss the waiver with your insurance company before signing it. .

How long does subrogation last?

The subrogation process can take weeks or even months, according to Progressive. The time required to settle a subrogation claim may vary depending on the complexity of the claim and the status.


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