If you get in an auto accident, you want your car back quickly. If it wasn’t your fault, you can wait for the other party’s insurance company to inspect your car and pay for the repairs. But it might be faster to go through your own insurance company. If you do, you and your insurance company are entitled to recoup the money paid on the claim through the “subrogation” process.
Some detailed legal definitions of subrogation deal with equitable remedies and substituting one creditor for another, but in simpler terms, subrogation is the process of getting back money from the party at fault. The premise is that the insurance company owes a payment (is subrogated) on behalf of the insured (the responsible party) to remedy the claim from you and your insurance company. Subrogation happens in many types of insurance, but it is most common in auto insurance.
How Subrogation Works
The subrogation process really begins with you getting all the pertinent information from the other party so your insurance company can follow through. Then, once your insurer settles your claim for vehicle damage due to the other driver's negligence, your claims adjustor will forward the file to the subrogation department, which will then attempt to contact the at-fault party or their insurance company to seek restitution. This may simply involve calling the other party's claims adjuster to arrange payment, or it may involve repeated attempts to contact the person who was at fault. Your insurer will typically have you sign a subrogation release that assigns your right to recover money from the responsible person to them. If you had to pay your deductible, they will also request that money back when the other driver or their insurance company pays the subrogation claim.
Sometimes, an insurance company has to subrogate directly against the other driver and ask for reimbursement, particularly if the person is uninsured or underinsured (their coverage won’t pay all the costs). In these cases, the process is similar to collections procedures. Your company and the other driver negotiate a payment plan, with the driver making payments directly to your company.
Subrogation is essential, ethically and financially. It is only fair that the at-fault driver and the other insurer should pay restitution. Subrogation also helps keep costs down. If an insurance company consistently paid claims that it shouldn’t be covering and didn’t recover the money, it couldn’t survive or would have to charge astronomical rates.
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