: Subrogation: What It Is and How It Works
Subrogation: what it is and how it works
Suppose you’re in a car accident and it is clearly not your fault. Your car is wrecked and your neck and back have been injured. You are covered for both the damage to your car and your personal injuries, and so you call your insurance company and they pay all of your expenses relating to the accident. Later, your insurance company, realizing that the other party at fault also has insurance that will cover the damages, seeks out reimbursement from that insurance company since its insured was actually at fault for the accident. This is called subrogation.
Suppose you’re in a car accident and it is clearly not your fault. Your car is wrecked and your neck and back have been injured. You are covered for both the damage to your car and your personal injuries, and so you call your insurance company and they pay all of your expenses relating to the accident. Later, your insurance company, realizing that the other party at fault also has insurance that will cover the damages, seeks out reimbursement from that insurance company since its insured was actually at fault for the accident. This is called subrogation.
Subrogation refers to an insurance company seeking reimbursement from the person or entity legally responsible for an accident after the insurer has paid out money on behalf of its insured. The general rule is that, after paying your claim, your insurer is “subrogated” to the rights of your policy and can “step into your shoes” to go after or sue the negligent party on your behalf. Not all insurers subrogate for medical bills. If they do, it could be against the other driver’s insurance, but it could also be against your own separate health insurance policy or any other medical insurance that would cover your treatment.
Subrogation may also be employed when your insurer settles your collision claim for damage to your vehicle due to another driver’s negligence. Generally, your insurer will have you sign a subrogation release that assigns your right of recovery against the person responsible for your loss to them. Insurers may not stall settling your claim until they get paid from the person at fault. Subrogation usually occurs some time after the original claim is settled. Some insurers will include the deductible when they subrogate and you will get your deductible back when the other driver or their insurance company pays the subrogation claim.
What if the accident was your fault?
If the accident was your fault, you are responsible for the damages caused. If the accident was only partly your fault, you may be only responsible for a portion of the damages depending on the laws of your state. The other driver’s insurance company will likely subrogate against you or your insurance company to pay for the damage to their insured’s car and/or their medical bills. Keep in mind that often you can negotiate the amount of damages that is being claimed and pay out the amount over time. If you don’t have insurance and a claim is being subrogated against you, it is a good idea to contact a car accident lawyer to make sure you are not getting taken. Be patient, but keep on top of your claim.
It is best to cooperate with your insurer, within reason of course, when a subrogation claim has been made. In most cases, the two insurance companies are going back and forth to verify what happened and what amounts have been paid out. Unfortunately, this takes time – sometimes too much time. Be patient, but keep in close contact with your claims person so your claim doesn’t get pushed to the bottom of the pile!