For individuals who are not part of the insurance industry, subrogation is an unfamiliar term. If you have a claim with a car insurance company, however, it is important to understand what subrogation is and how insurance companies use it to recover some of their expenses.
Subrogation can be defined as the substitution of one person or entity for another in the settling of a claim or debt. It often refers to the insurance company seeking reimbursement from the party legally responsible for an accident after the insurer has already paid money on behalf of the insured. These typically include money paid out for deductible amounts, pain and suffering, loss of consortium, diminished value, or property damage.
While the concept of subrogation may seem daunting, its primary purpose is simply to ensure that a particular claim or debt is paid for by the person or entity actually responsible for it. It also gives specific rights to the substituted party who takes responsibility for the claim or debt.
How does it apply in a car insurance claim? When you purchase car insurance, you are issued a policy that states what will be covered in the event of an accident resulting in property damage or personal injury. If you are involved in a car crash and another driver was entirely at fault, the insurer of the at-fault driver typically takes care of any medical bills or repair costs. If you have collision coverage and are unable to collect from or settle with the other person’s insurance company for some reason, then you may submit the claim to your own insurance company. You pay your own collision deductible, and your insurer pays for the damages of the accident you did not cause. Subrogation allows your insurer to recover all your accident costs from the insurer of the at-fault driver on your behalf—including your collision deductible.
Subrogation is usually the last part of the insurance claims process. It sometimes transpires between insurance companies. However, it is important to know your subrogation rights in case there is an error that either costs you money or the right to file a claim in the future.
If your insurance company pursues subrogation, they typically inform you of their doing so. This is important because the insurance company must recover the cost of your deductible and refund you if they are able to recover it successfully. Also, you must cooperate with your insurance company in their attempts to pursue subrogation. This means not making agreements or signing waivers that release the other driver from responsibility, among other things.
If your insurance company does not pursue subrogation, you may still attempt to recover your deductible from the driver at fault or his or her insurer. It is much easier, however, to have the insurance company recover it for you.
To help keep things running smoothly, just remember to report any accidents as soon as possible and let your insurance company representative know if you choose to take any legal action. A health insurer like Medicaid or Medicare may also have subrogation rights.
If you have been injured in a car accident call The Fitch Law Firm at 855-LAW-OHIO or fill out our online consultation form to schedule a free consultation.