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What Is Subrogation And Why Is It Important: Accident Claims

subrogation claim

As a driver, you’re bound to have some accidents on the road. It’s particularly frustrating when the other party’s negligence causes the accident since settling a case can take time. Meanwhile, you might have to pay out of your pocket for expensive repairs on your car as you wait to get reimbursed. Luckily, there can be an easier way; subrogation. You might have read this word when you read the terms of your insurance policy. Here we will take a deeper dive into what it means for you.

Subrogation In Auto-Insurance

Let’s say you were hit by a car that ran a red light. In case you were not at fault, that is where subrogation steps in. It shields you and your insurance provider from paying for damages and repairs and the liability goes to the party at fault. Essentially, it is a way for your insurance provider to stand in your place to collect reimbursements from the at-fault party, as your insurer pays your expenses. Through your insurance’s subrogation policy, you are protected from paying costs for an accident that was not your fault, as, without car insurance, you would have no legal entity ensuring you get your money back. If pursued successfully, a subrogation case could mean both you and your insurance provider get a full refund on your claims. Subrogation can be applicable for different insurance types such as home, medical, and even business and rental insurance.

How Does Subrogation Work?

Following an accident of this nature, your insurer will notify you if they pursue a subrogation case after they determine if the case has grounds for subrogation. All at-fault cases will not be eligible for subrogation - it really depends on the state law and the details of your accident. It may also be possible that all of your claims are not covered under the law, in that case, subrogation would not get you a refund. Hence, if you sustain a personal injury in an accident due to another driver’s negligence, how subrogation may affect your injury claim will essentially depend on the local and state laws. Your insurance provider generally handles the subrogation process, hence, your involvement is minimal. As a result, it will not affect your driving record or insurance coverage. However, your insurance rate might be reviewed. Whether or not you receive your deductible back will also depend on how much money your insurer can recover, so handling a subrogation claim successfully is vital. The duration of the subrogation process depends on various factors that can either slow it down or expedite it. One of the delaying factors is uncertainty in determining which driver was at fault or in case it is determined that both were at fault. This complicates things as, depending on which state you are in, a partial responsibility in the accident might lead to only part or even no recovery of the cost. Another delaying factor could be that the other party responsible does not have insurance, which means your insurance provider will have to directly sue them and that can be a long process.

Waiver of Subrogation

Sometimes, the at-fault party may seek to settle the damages caused by the collision directly with you. This would require that you sign a waiver of subrogation. By signing this document, you would strip your insurance provider of the right to step in on your behalf and recover expenses resulting from the accident from the driver at fault. It is not recommended for you to sign a waiver of subrogation without the consultation of your insurance provider, primarily for two reasons. The first is that the deal might not always be better for you and in case anything goes wrong, you would have lost the benefit of having your insurance company taking care of you by signing the agreement. Since most insurance companies generally include a clause in their terms that disallows signing waivers of subrogation to protect their rights of subrogation, doing so could cause you to be in breach of contract with your insurance provider. This would have dire consequences for your claim. The company can rescind its coverage to you and you will lose rights to any claims under the insurance policy.

Subrogation might be an unfamiliar concept but it isn’t a tough one. For the most part, it ensures that you are entitled to a full payback in case of an accident due to another party’s negligence. Your insurance providers will have full information on subrogation and how it applies to you, so be sure to check with your insurer.