What Is Subrogation?
Subrogation is defined as a legal right that allows one party (e.g., your insurance company) to make a payment that is actually owed by another party (e.g., the other driver’s insurance company) and then collect the money from the party that owes the debt after the fact.
Subrogation is one of the ways that car insurance companies recover money that was paid out in claims to drivers insured by them.
How Subrogation Works
Subrogation is generally the last part of the insurance claims process. In most cases, the insured person hears little about it. It’s something that happens between insurance companies.
If an insurance company does decide to pursue subrogation, however, the law requires that they inform you that they are doing it. This is important to you, the customer and injured party, for two main reasons:
If the insurance company decides to pursue subrogation to recover costs, they must try to recover the cost of your deductible as part of the process, and refund it to you if they do recover it.
Generally, your insurance policy will require you to cooperate with any attempts by the insurer to pursue subrogation.
Among other things, this means you may not be allowed to sign any waivers or agreements that release the other driver from responsibility if he is judged to be at fault in the accident.
If your insurance company does not pursue subrogation, you can still attempt to recover your deductible from the other driver or his insurer, but it’s far easier to let the insurance company recover it for you.