Guide to Auto Subrogation Claims

Car insurance policies are littered with language you might not use in most normal circumstances. “Subrogation” is one of those words. Essentially, subrogation occurs when your insurance provider has to pay for damages or injuries that someone else caused. In order to recoup the money spent, companies file third-party subrogation claims.

The good news is that insurance companies handle most of this process behind the scenes, with little to no input from the insured (you).

As for subrogation claims against you, you’ll have to pay them if they’re valid. If you don’t pay, you could face a lawsuit, so it’s best to adhere to the mailed reimbursement request. However, if you hire a lawyer, you can negotiate. Look for a subrogation defense attorney³ on sites like Lawyers.com, Nolo, and Avvo.

If you’re making a claim against someone else, very little action is required on your end. Your insurance company will handle the insurance adjusters and negotiations behind closed doors.

Pros and Cons of Subrogation

Subrogation comes with its positives and negatives. On the positive side, you could get reimbursed for injuries or damages you didn’t cause. Companies that subrogate claims save money and, in theory, pass those savings on to customers, lowering the cost of premiums. Plus, if you subrogate a claim, you can avoid a lawsuit.

On the other hand, a subrogation claim could take a while, especially if the incident involved partial fault or an uninsured motorist. If you’re found to be partially at fault, your rates could increase, and if you receive a judgment, you may owe money to your insurance provider.⁴

Essentially, subrogation can be a great thing if you aren’t at fault and are filing a claim, but it’s not so great for the at-fault driver receiving the claim, especially if they were driving without insurance.

Subrogation Examples

Here’s an example of when subrogation would occur. Let’s say you’re pulling out of a parking spot and you get rear-ended. You file a third-party claim with the at-fault driver’s insurance provider, but you don’t see any money for a month, and you need to get your car repaired. You pay out of pocket for repairs in the meantime, while your insurance provider files a subrogation claim to reimburse you for the repair costs.

The Purpose of Auto Subrogation

The purpose of auto subrogation is to reimburse you for the costs of repairs, injuries, or the deductible in an accident that wasn’t your fault.

What Is a Waiver of Subrogation?

A waiver of subrogation is an agreement that prevents your insurance company from acting on your behalf to retrieve expenses from an at-fault party. In other words, if you sign a waiver of subrogation, you can’t subrogate a claim and have their insurer pay you directly. Instead, you have reached a settlement with the other party without the involvement of your insurance company. If you sign a waiver, make sure to notify your insurance company.⁵

If you’re at fault in an accident, try to get the other party to sign a waiver of subrogation. That way, you can settle the claim privately and won’t have to pay a subrogation claim.