What is a Subrogation Claim (Auto Insurance)

If you are involved in an accident, you may suffer losses that are reimbursed by your car insurance provider before or after repairs are made. There are often many things that go on behind the scenes after an accident occurs. Your automobile insurance provider will likely do an investigation into what happened, looking over police reports and other documentation. During this, they may realize that the other driver is not only at fault, but also has their own automobile insurance plan. Car insurance providers can be a big convenience after an accident occurs, not only because of the direct financial support but also because they often make claims with the other person’s insurance provider if the other driver is deemed to be at-fault in an accident. When a car insurance provider makes a claim to another auto insurance carrier, there is a term for it.

What is Subrogation?

A legal right that allows one party to make a payment that is actually owed by another is called subrogation, particularly when that one party can collect the money at a later point. For car insurance, this means that your insurance company can make a payment to you that is owed by the other driver's insurance company. If the other driver has been found at-fault in an accident you are involved in, your insurance provider may decide to pay your medical bills knowing that the money will eventually be claimed from the other driver's insurance carrier.

This is one of several methods that is utilized by insurance companies to recover money that they have paid out to insured drivers. In most cases, subrogation will occur during the last part of the claims process. Most of the time, the policyholder whose company is utilizing subrogation will not hear much about the process, just that it is happening. For the most part, this is something that is specifically done between insurance companies. Unless you ask whether or not your auto insurance provider is utilizing the process, you may never know much about it.

That said, there are benefits to your car insurance company using subrogation. If the claim your auto insurance provider makes to the other insurance company is successful, it is possible that your auto insurance carrier will refund your deductible, and in some cases, it is required. This means that you could get up to $1,000 or more returned to you, which can be a fantastic benefit.

How Does Subrogation Work?

Your car insurance provider is required by law to inform you if they are utilizing the subrogation process. First, they will contact you; then, they will contact the other insurance company. Your insurance company requires you to cooperate with attempts to pursue subrogation. Due to this, you are not allowed to sign a waiver or agreement releasing the other driver from responsibility if they are deemed to be at fault in an accident. Even if your car insurance provider is not pursuing subrogation, you could still recover your deductible from the at-fault driver's insurance company.

When Do Car Insurance Companies Pursue Subrogation?

Auto insurance companies will pursue subrogation when another driver is found at fault in a car crash you are in. There are generally two steps that your insurance carrier will follow if they do decide to pursue it. First, your insurance company will pay your claim. This allows you to cover expenses related to injuries and damages stemming from the accident. Your insurance company will utilize subrogation to recover the money that they paid to you. This is a process that can take some time, and remember that you will benefit if the subrogation is successful. Your auto insurance provider could return your deductible, or a portion of it, to you.

Why Do We Need Subrogation?

It takes a bit of time to determine who is at fault in an automobile accident. Often times, there is an investigation that takes place to determine this information. This can take from days to months, and many people cannot wait for the money a auto insurance company provides to help pay for car rental costs, car repairs, medical bills, and other expenses. Subrogation helps people get money for these things faster, increasing the efficiency of medical treatments and auto repairs and letting people get back to their lives sooner.

Avoid Waiving Your Rights To Subrogation

It is possible for people to waive their rights to subrogation. This can happen unknowingly if the driver is not aware of what subrogation is and how to avoid waiving the rates to it. If you sign a settlement with the other driver's insurance company, it may contain a waiver of subrogation clause in the agreement. Signing this waiver of subrogation, and in many cases, the settlement itself, if it has one, can put you in a financially worse position overall. Not only will you not be able to get a refund on your deductible, but your own auto insurance provider might refuse to pay your claim. If they are no longer able to get reimbursement from the other driver’s auto insurance company, they may be able to deny your claim.

Final Notes

Of course, it all starts with having a policy and knowing not to sign a subrogation waiver. You can get the best prices for car insurance here at General Insurance, but remember to stay in communication with your auto insurance carrier every step of the way if an accident occurs.