What Is Subrogation?

Subrogation is the process by which an insurance company can obtain reimbursement for benefits it paid you for a claim arising from an accident caused by another party. Subrogation ensures that you and your insurance company do not bear financial responsibility for losses that were somebody else’s fault.

In subrogation, an insurance company pursues an accident claim that the company’s insured might have against an at-fault party. Through that claim, the insurance company can secure reimbursement for the money it paid to the insured party and potentially repay the insured for their other expenses, such as deductibles.

Your insurance policy and state law will determine your rights and obligations in subrogation. An experienced personal injury lawyer can help you understand the subrogation process, explain what steps you must take during subrogation, and advocate for your rights and interests.

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When Does Subrogation Occur?

An insurance company may exercise its right of subrogation after the company’s insured gets into an accident caused by someone else, and the insurance company pays benefits to their insured. For example, suppose a driver gets rear-ended by a negligent motorist. In that case, the rear-ended driver may file a collision claim with their insurance company to obtain money to fix their vehicle. When the insurance company pays out on that collision claim, they may file a subrogation claim against the at-fault driver or their insurance company. The subrogation claim aims to recover the money paid on the collision claims and potentially reimbursement for the rear-ended driver’s deductible.

What to Expect When You File an Auto Insurance Claim

When you file an insurance claim after an auto accident, you can expect to go through several steps as you obtain money from your insurer. First, you should expect to receive notice from your insurer that it has received your auto claim. The insurer will assign a number you can use to identify your claim in any future correspondence with the insurance company. The insurer will also assign an adjuster to investigate your claim and determine your eligibility for coverage.

The adjuster may ask you for additional information to process your claims, such as a police accident report, photos of the crash scene or your vehicle, medical records from the treatment of your accident injuries, or copies of bills, invoices, receipts, or pay stubs.

The adjuster may also refer you to a car repair shop to fix your vehicle and advise whether the insurance company will approve new original equipment manufacturer (OEM) parts or whether you must use non-OEM or used parts. You will pay the difference in cost between new OEM parts or non-OEM/used parts if the insurance company will only approve the latter. The adjuster can also help you secure a rental car if your policy provides rental coverage.

You should expect the adjuster to provide a decision on your claim within the timeframe stipulated in your insurance policy or by state law. The coverage decision will explain whether the insurance company has accepted or denied your claim, the reasons for denial (if applicable), and the amount of money you will receive if the insurance company accepts your claim. In many cases, the insurance company will pay coverage benefits directly to parties who provided services after the accident, such as auto shops or healthcare providers.

What Occurs in Subrogation?

In most subrogation claims arising from auto accidents, the drivers’ insurance companies will work behind the scenes to resolve the claim. Drivers usually have little participation in the subrogation process, although insurers may ask drivers for additional information or to provide a written or recorded statement or answers to questions. Insurance companies will negotiate a settlement resolving the subrogation claim where the at-fault driver’s insurance company agrees to pay if it accepts liability for the accident. Depending on how much money an injured party’s insurer recovers in subrogation, the injured party may receive reimbursement for any deductible amounts they paid.

What is a “Waiver of Subrogation?”

A “waiver of subrogation” is an agreement that precludes your insurance company from filing a claim to obtain reimbursement from an at-fault party for the benefits your insurance company paid you. In accident cases, an at-fault party may ask the accident victim to waive subrogation so the at-fault party can settle the claim with the injured party directly without involving the injured party’s insurance company. Waiving subrogation may allow an at-fault party to settle the injured party’s claim more quickly and avoid negative activity on their insurance profile that may cause their premiums to increase.

Most auto insurance policies prohibit insureds from waiving subrogation unless the insured first obtain the insurance company’s approval to do so in a settlement agreement or the policyholder has purchased a waiver of subrogation endorsement in their auto policy.

How Can an Attorney Help If the Insurance Company Pursues Subrogation?

When your insurance company has advised you that it intends to exercise its subrogation rights or if an at-fault party asks you to waive subrogation as part of a settlement, you should consult with an experienced personal injury attorney to learn about your rights and obligations in subrogation. An attorney can help you through the subrogation process by:

  • Explaining the subrogation process so you know what to expect.
  • Reviewing your insurance policy to advise you of your rights and obligations if your insurer chooses to pursue subrogation
  • Communicating with the insurance company on your behalf during the subrogation claim
  • Advising you of your rights, obligations, and the consequences of a waiver of subrogation if requested by an at-fault driver in settlement of your car accident claim

Contact a Personal Injury Lawyer to Discuss Your Rights

After you’ve suffered injuries in an accident and filed an insurance claim, talk to a personal injury lawyer from De Castroverde Personal Injury & Accident to learn more. We can discuss the subrogation process and how it may apply in your case. Contact us today for a free, no-obligation consultation to consult with our experienced legal team about your rights.