Subrogation is the legal process by which an insurance company seeks reimbursement after it has already paid a claim for an accident on behalf of the insured.
For example, if you were in a car accident and filed a property damage claim with your insurance company, your collision insurance and comprehensive auto insurance would pay to have your vehicle fixed. If the accident was later determined to be the fault of the other driver, however, your insurance company would file for reimbursement against the other driver's auto insurance policy.
The Subrogation Process
The term subrogation comes from the Latin word "subrogare," which means to "stand in the place of." If you are not responsible for an auto accident, you have the legal right to sue the negligent driver. If you accept payment for damages from your insurance company, however, you transfer this right. Subrogation means the insurance company can sue on your behalf.
In the insurance business, subrogation is the last step in the claims process, and because of this many drivers stop worrying about a property damage claim after they get their vehicles repaired; however, subrogation is necessary to help keep costs down.
For example, if your car insurance company pays for a claim that is the legal responsibility of someone else, it causes an unnecessary increase in your rates. In addition, if you have a deductible on your policy, you could have out-of-pocket costs ranging from $100 to $1,000 or more. Recovering this money through the subrogation process allows your insurance company to reimburse you for your deductible payment.
After an auto accident, your insurance company must tell you if it is planning to pursue subrogation. If it pursues subrogation, repayment of your deductible must be part of the process. If it is not planning subrogation, you still have the option of trying to recover the deductible on your own.
Typically, your insurance policy requires you to cooperate with the company’s subrogation efforts. You are not legally allowed to take any action that would jeopardize your auto insurance company's right of recovery, such as signing an agreement that would release the negligent driver from liability in exchange for the payment of your deductible.
Assistance with Your Auto Claim
If you were responsible for an auto accident and did not have the proper car insurance coverage, you will want to contact a car accident lawyer if a claim is being subrogated against you. This process can be very involved and is difficult to handle on your own. Having the assistance of a legal professional will help you make sure your rights are protected.