What is subrogation? | The bank rate
Subrogation is an important tool that allows your insurance company to quickly pay you for the losses you suffer in an accident, even if another party is at fault. The tool is commonly used in auto accidents.
Subrogation seems like a complex legal term that only a lawyer can understand. On the contrary, subrogation is a simple mechanism that makes it easier for you to benefit from the benefits of your automobile insurance policy without having to first initiate legal proceedings to prove fault.
What is subrogation?
Subrogation refers to the common practice whereby an insurance company first pays for a loss suffered by its insured and then attempts to recover the amount of that payment from the third party responsible for the loss in the first place. In practice, the insured assigns or “subrogates” his claim against the legally liable party to the insurer in exchange for payment to cover the loss. The insurer can then request reimbursement of the amount paid to you by the party at fault.
Subrogation is a shortcut in the legal process that allows your insurance company to take the burden off you of pursuing a claim. Without subrogation, those who suffer loss as a result of an accident would be required to personally take all necessary steps, including possible legal action, to raise funds from the offending party.
When does the subrogation take place?
Subrogation usually occurs when an accident occurs between two parties and one of the parties is totally or partially at fault. Insurers will use the right of subrogation to pay their non-at-fault policyholder and then seek reimbursement from the responsible party’s auto insurer. Subrogation can arise in a variety of claim situations.
Drivers are both partially responsible
Subrogation can come into play when more than one driver is responsible for an accident, a common occurrence. Subrogation allows the respective insurance companies to pay their policyholders and then determine what percentage of liability is attributable to each party along with the other carriers involved. This resolution between insurers can be done amicably or as part of legal proceedings.
The fault is not clear
If it is not clear who is responsible for an accident, the subrogation process is usually more complicated. In theory, you should be compensated for your property and personal injury first, but depending on your policy and state law, full payment of your claim could be delayed if there is a prolonged dispute over the allocation of the claims. responsibilities.
When all parties to an accident are insured, the subrogation process is more likely to go smoothly. Auto insurers don’t want to spend time and money in court if it can be avoided, and therefore, they usually work together to achieve a quick settlement.
When a faulty party does not have insurance, the subrogation process may take longer. In these cases, the carrier will usually have to take legal action to recover the amount paid to its insured. It is difficult to predict how long legal proceedings will take.
How long does the subrogation last?
Typically, the subrogation process is initiated when an insurer pays on a claim for losses, resulting from an accident for example, made by its policyholder. Then the carrier takes action to recover the amount he paid from the party who caused the accident and damage.
In the simplest case, where the third party is 100% liable and does not dispute the subrogation request, the subrogation process usually proceeds quickly. On the other hand, the process can be delayed when the fault is not clear or the offending party has no insurance.
What is a waiver of subrogation?
When you sign a waiver of subrogation, your insurance company can no longer sue the offending party. This could arise, for example, when you make a direct settlement with the party at fault in an accident, and the other party will only pay you after you waive the subrogation. This assures that party that the settlement with you is final and that your insurance company also cannot sue them in the future.
Because a waiver of subrogation involves the extinction of the legal rights to recover of the party at fault in an accident, it is always important to take this step after discussion with your claims adjuster and, if necessary, a lawyer.
Frequently Asked Questions
Is subrogation a good or a bad thing?
In the long run, there are benefits for all parties when the subrogation process works well. First of all, the injured party can be paid quickly by his insurance company which is assured of the right to recover from the party at fault.
What is an example of subrogation?
In an accident in which an inattentive driver hits you from behind, it is clear that the other driver is at fault. It wouldn’t be surprising if you could file a claim and get a check issued by your insurance company within days to repair your vehicle and cover your medical expenses following the accident. While you are in care, your insurer will sue the offending party’s insurer for reimbursement of the claim they paid you in advance.
Do I have to pay for a subrogation?
No, the right of subrogation is not taken into account in the cost of your automobile insurance premium. The subrogation process allows insurers to work behind the scenes, determine liability for the accident and allocate payments accordingly. This allows your carrier to pay you faster, but there is no charge for you.