In a general sense, the word subrogation means “one person or party stands in the place of another,” according to findlaw.com.
In the context of car insurance, though, subrogation refers more specifically to when an insurance company pursues legal action against a driver who causes an accident involving one of its policyholders.
An insurance company files a subrogation claim to recover some or all the money it paid out in an accident claim.
You’ll learn more about subrogation in this article, which explains:
- How subrogation works in terms of car insurance
- How subrogation works if both drivers are at fault for an accident
- How subrogation works if the other driver is uninsured
- What happens if your insurance company can’t recover the full claim loss
How does subrogation work when it comes to car insurance?
Here’s an example of how subrogation works with car insurance.
Imagine you’re in a traffic accident. The other driver is at fault, not you. The crash causes $5,000 of damage to your car.
You file a claim with your car insurance company. Then you pay your policy’s deductible. Let’s say that’s $1,000. Your insurer responds by covering the remaining $4,000 you need to repair your car and get it back on the road.
It also files a subrogation claim with the other driver’s insurance provider. That claim will be for $5,000.
If the subrogation claim is successful and your insurer recovers the full $5,000, it will keep $4,000 and return your $1,000 deductible to you.
In case it’s not clear, you don’t have much to do during all of this. You just file a car insurance claim like you would for any other incident, and your insurer takes care of the rest. Most of the subrogation process takes place behind the scenes between your insurer and the other driver’s.
How does subrogation work if both drivers are at fault for an accident?
The subrogation process works a bit differently when both drivers are at fault for an accident. Here’s another example.
Once again, let’s say you’re in an accident that causes $5,000 of damage to your car. This time, though, an investigation finds you partially responsible — 30% — for the crash.
Your first steps: call your insurance company, tell them about the accident and file a claim.
Then you pay your $1,000 car insurance deductible while your insurer pays the remaining $4,000 worth of damages. Your insurer will attempt to recover this money from the other driver, since they were mostly responsible for the accident.
In this case, however, your insurer can recover a maximum of $3,500, not the full $5,000. Why? The other driver was only 70% at fault for the crash. Because of that, you and your insurance provider get just 70% of your money back.
Also, your auto insurance company won’t return your entire deductible to you here. You originally paid for 20% of your repair costs via your $1,000 deductible, while your insurer paid for 80% of it.
Those same percentages will be used to divide the recovered funds. In other words, you’d get $700 and your insurer would get $2,800.
How does subrogation work if the other driver is uninsured?
What happens if you get into a car accident with an uninsured driver? The main difference in this situation is your insurance company begins subrogation proceedings against the other driver directly rather than against another insurer.
Everything else about the subrogation process should be the same as what was explained above. You report the accident, you file a claim and you pay your deductible. Then, your insurance provider attempts to recoup the money from the responsible party. In this case, that’s the uninsured driver.
A subrogation claim filed against an uninsured motorist can differ from other such claims in these other ways:
- The process can take a lot longer than it does when it involves a pair of insurance companies.
- The process is less likely to result in you and your insurer recovering all your repair costs.
What happens if my insurance company can’t recover the full claim loss?
Assuming you weren’t at fault for the accident, you’ll receive a percentage of the recovered amount equal to what you put in via your deductible. So, if you pay for 20% of your car’s repairs after an accident and your insurer pays 80%, you’ll receive 20% of the recovered amount.
This doesn’t only happen if you’re found partially at fault for a crash that prompts a subrogation claim. It also happens during what some call no-fault subrogation situations. Although insurance companies always aim to get back what they pay out these cases, they don’t always succeed. Sometimes they only recover part of that amount.
Regardless, the amount returned to you depends on the percentage you put toward repairs through your deductible.
How long does subrogation take?
It’s impossible to say how long subrogation might last for you. Negotiations like this can go quickly or slowly.
One thing you can be sure of is that the more straightforward your situation is, the more straightforward the subrogation process should be.
In other words, if the other driver is fully at fault for the accident and they are fully insured, the process shouldn’t take too long. If you’re found partially at fault for the accident, though, or if the other driver doesn’t have insurance, expect subrogation to take longer.
Can I waive subrogation?
You can waive subrogation, but it isn’t something you request of your insurer.
Instead, you’ll usually waive subrogation if you settle the accident with the other, at-fault driver or their insurance company.
During settlement negotiations like this, it isn’t unusual for the at-fault driver or their insurer to make you sign a waiver of subrogation as part of the deal.
What is a waiver of subrogation? It’s an agreement that prevents your insurance company from stepping in and trying to recover its — and your — losses.
If that sounds fine with you, consider this: your insurer may not pay your claim if you waive subrogation after a crash.
So, before you go this route, make sure the settlement you receive from the other driver is at least as much as what you’d get from your insurance company.
Additional subrogation insurance advice
Here are some things to keep in mind if a car insurance company files a subrogation claim on your behalf:
- Tell your insurer right away if you get into an accident. Especially if you didn’t cause the crash and if it damaged your vehicle.
- By law, your insurance company must tell you if it’s going to pursue subrogation against another person or insurer.
- Insurers have to try to recover your deductible amount as well as what it paid out for your auto repairs or injuries.
- Some insurers won’t let you waive subrogation. And most of those that do will want you to give them a heads up before you sign a waiver of subrogation.
- If your insurance company decides not to file a subrogation claim in this type of situation, you can try to recoup your repair or medical costs from the other driver on your own.
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