Subrogation & Auto Insurance: What it is and How it Works

Subrogation is not a word you typically hear in casual conversation, but it’s something you ought to be aware of in case you have a car accident.  It is the process by which an insurance company seeks reimbursement from the person or entity legally responsible for an accident after the insurer has paid out money to, or 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.

If your insurance company, for example, pays your healthcare providers for your medical treatment following an automobile accident and someone else was at fault for the accident, your insurer is legally entitled to be reimbursed by the person at fault (or his or her insurance company).   Not all insurers subrogate for medical bills.  If they do, it could be against the other driver’s insurance.  Whether you were at fault or not, your insurer could also subrogate against your own health insurance policy or any other medical insurance that would cover your treatment.  If you have a policy with Blue Cross, for example, your auto insurer may seek reimbursement from Blue Cross for the bills they paid from your accident.

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 are 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 an attorney to protect your interests.

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 a long time. Be patient, but keep in contact with your claims adjuster so you know what’s going on.  And next time you’re at a party, you’ll impress the guests with your new word, subrogation.