@media only screen and (min-width: 64em) { .hero { height: 360px; } .hero__headline { margin-top: 0%; margin-left: 0%; } .hero__foreground { bottom: 0%; left: 0%; transform: scale(1); } } @media only screen and (min-width: 40em) and (max-width: 64em) { .hero { height: 290px; } .hero__headline { margin-top: 0%; margin-left: 0%; } .hero__foreground { bottom: 0%; left: 0%; transform: scale(1); } } @media only screen and (max-width: 40em) { .hero { height: 350px; } .hero__headline { margin-top: 0%; margin-left: 0%; } .hero__foreground { bottom: 0%; left: 0%; transform: scale(1); } }

What is subrogation in auto insurance?

Fact-checked with HomeInsurance.com

Subrogation isn’t a word you hear every day, but if you’ve been in a car accident, it may play a big role in determining what your payout is and how you receive it. Simply put, subrogation is the legal process your insurance company follows to recover expenses when there’s been an accident.

What is subrogation? 

Subrogation helps determine who’s at fault in a car accident. If more than one driver is at fault, subrogation determines what percentage of responsibility each driver holds. This will indicate how much money each driver is entitled to in the payout on their insurance claim.

Subrogation isn’t something you will be involved in. Insurance companies take on this responsibility. After an accident, your provider will pay you a certain amount to fix your car, so you can get back behind the wheel quickly. Then your insurance provider will work with the other driver and their insurance company to determine what each party will pay.

What is an example of subrogation? Let’s say you get rear-ended when you’re stopped at a red light, and the other driver was chatting on their phone and doesn’t notice your car. You call your insurance company, and it issues you a check within a few days to help you repair your car.

Once that’s done, your provider works with the other driver’s insurance to get a settlement to cover your provider’s costs (what they paid out to you) and your deductible, which you may have paid when the claim was made. 

As you can see, subrogation spares you a lot of time and trouble — the insurance company makes the phone calls, fills out the paperwork and handles the other tasks involved in processing the claim. Subrogation benefits you, and it also benefits the insurance company, allowing them to recover costs on an accident that you, its policyholder, did not cause.

What to expect when filing a subrogation claim

Subrogations may take little time if who is at fault is clear and the other driver has a solid insurance policy. It may take more time if there are questions about who caused the accident or if the other driver doesn’t have insurance. 

When the fault is unclear in a collision, you can still receive a quick payout from your insurer. It may have to initiate an investigation of blame, possibly in conjunction with the other driver’s insurer. In this case, the subrogation process will probably take longer.

It gets a little more complicated if there is partial fault in the collision. Let’s say you’re in an accident that causes $5,000 damage to your car. It is determined that you and the other driver share equal responsibility for the accident — a 50/50 split. Your insurer will quickly pay you $4,000, which is the amount needed to fix your car, minus your $1,000 deductible. 

Your insurer will then make a subrogation claim to the other driver’s insurer for $2,500 — reflecting half the costs because you were 50 percent responsible. If everything goes well, the other company will give your insurer $2,500, and your insurer will cut you a check for $500, which is half of your deductible payment.

If the other driver is uninsured, things can get messy. Your insurer will pay your claim, then begin subrogation procedures against the other driver. Because the provider is working with an individual rather than a company, it may be harder to recover the expenses. It could also take more time if it becomes a court case.

The benefits of subrogation 

Subrogation is good for you because it gets you driving more quickly than if you had to wait for the whole insurance process to play itself out, especially if it’s a situation involving an undetermined fault or an uninsured motorist. Without subrogation, you might be waiting months — or longer — before your claim was paid by the appropriate insurer. 

You may also be saving yourself considerable time spent completing legal paperwork or talking to adjusters, lawyers, and others involved in the subrogation process. Instead, your insurer takes on the responsibility of handling the subrogation process, sparing you from the challenges of successfully recovering money.

Subrogation also benefits your insurer because it allows the provider to reclaim all or a portion of the money it paid out for your initial claim. By doing that, it reduces its expenses for each claim, which allows the provider to set premium prices lower, which benefits you in the long term.

Waiving subrogation

If subrogation is waived, your insurer cannot pursue the at-fault driver or their insurance company to have the damages to your car paid for. 

Why might someone do this? Often, it’s something the at-fault driver or their agent will ask you to sign to settle with them directly. It suggests they are willing to give you some sort of payment, bypassing the subrogation and insurance process.

It may not be a good idea to sign a waiver of subrogation. Your insurance company may not allow you to do so. Waiving subrogation puts your insurer at a greater risk of not recovering the funds it paid out, and depending on the circumstances, it could advise you not to do so.

The takeaway 

Subrogation, which allows your insurer to pursue a third party to pay for your claim, benefits both you and the insurer.

  • Subrogation meaning is that your insurer can approach the other driver’s insurer to pay for your claim.
  • The costs will be split between the parties involved if the fault belongs to multiple people.
  • Subrogation means you’ll get a quicker payment with fewer hassles.
  • Claims with subrogation may take a short while or a long time if there are extenuating circumstances.
  • Subrogation allows you to get a quick payment and your insurer to recover the costs of the claims, benefiting both parties.

Subrogation insurance is when your insurer can pay you for damages to your car when you are not at fault, then work with the other driver’s insurance or with the driver to recoup losses.

Subrogation benefits you because you receive your claim check quickly and your insurer because it is able to make back the money for your claim. In some instances, you may be asked to sign a waiver of subrogation, but your insurer may not wish you to do this.

Mary Van Keuren

After 30 years as a writer and editor in academia, Mary now writes full-time for the insurance and finance industries. Her work has appeared on Reviews.com, TheSimpleDollar.com and Bankrate.com, as well as other consumer-focused websites.

Repossession and car insurance Read Next What is a lis…