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What is Subrogation in Car Insurance?


After an accident on the road, determining which driver was at fault goes beyond just pointing fingers. The police will have to file their report, examine traffic cameras, and the insurance claims need to be processed. However, there are some drivers who simply can’t wait that long. Regardless of fault, they need an insurance payout for medical payments for injuries and repairs for car damage. So, their insurance providers may do just that with a quick claim. A few days later, the police report comes in, and it’s determined that one of the drivers was at fault and the other driver’s insurance didn’t have to provide a liability payout. This is where insurance subrogation comes in. It quickly provides you and your insurer with a reimbursement payout after a paid claim for an accident in which they were not at fault.

What is Subrogation, And Why Does it Happen?

Subrogation can cause confusion for those unfamiliar with insurance. In a nutshell, subrogation is a legal right that a driver and their insurance company have to collect a payout equal to the amount they paid because the driver at fault had yet to be determined. If you’re familiar with insurance, then you would know that 48 out of 50 states require drivers to pay for damage and injuries they cause in a car accident with another. While subrogation is not as easy as an at-fault payout, it’s not uncommon for it to happen. As said before, at-fault payments can take longer because establishing fault takes some time, and there are those drivers who feel they need care or their car fixed immediately and need insurance to cover it. While it may seem bureaucratic, subrogation can actually be a good thing for yourself and your insurance provider if you end up using your coverage for expenses that you didn’t need to pay for yourself in the first place.

How is Insurance Subrogation Done?

The good news is that insurance subrogation is never complicated for the policyholder because they largely play no role in the subrogation process. It’s mainly an exchange between the insurance companies of each driver. Perhaps the reason you’re reading this is that your insurance provider contacted you, saying that they are going through subrogation. The only information you will have to give them is the deductible you paid at the time of the payout they need reimbursement for. That’s another great aspect of subrogation -the deductible you paid will also be reimbursed. If your insurance company doesn’t pursue subrogation against an at-fault driver and their insurance provider, you may sue for your paid deductible to be returned. It’s your money, after all, and you have a right to it. Your insurance company handles all the work while you sit back and await your deductible refund. At the same time, your insurance company is also refunded, and your premiums remain unchanged since you weren’t at fault for the initial payout. This is just one of the many benefits of successful insurance subrogation.

What Are The Benefits of Insurance Subrogation?

You and your insurance company get your money back thanks to subrogation. That’s the main goal, but did you know that a successful subrogation can benefit yourself and your insurers in more ways than just a refund?

Here are some other ways insurance subrogation will benefit you:

  • Timely insurance payouts - If your insurance provider plans to go through subrogation, then they will be quicker to provide a payout since they will be reimbursed for it.
  • Rates stay low - Because fault is established and your insurance company’s money is returned, your premiums will stay relatively the same. You can rest assured you will not be paying higher rates due to the past claim.
  • Easy for the policyholder - By now, you’ve read that the best part about subrogation is how little of a role you have in the process. All you need to do is wait for your deductible refund.
  • Insurance companies also save money - Your insurance company would be more familiar with the subrogation process than you. They know how reliable it can be if they paid out a claim which was another driver’s fault. Subrogation is never a bad thing for your insurance provider.
  • Don’t have to pay anything - You, as the policyholder, don’t have to pay anything during the subrogation process, nor is it included in your rates.

What Are Examples of When Insurance Subrogation is Used?

With a general knowledge of what subrogation and its process are, let’s look at specific cases for when it is necessary. Keep in mind that insurance subrogation is available for all types of insurance. This post only covers cases of auto insurance.

Times when your auto insurance provider will enter a subrogation process are:

  • Collisions with uninsured drivers - If a driver with no insurance causes a collision, your insurer will have to provide an injury and damage payout. From there, they may sue the at-fault driver. This subrogation typically takes longer and provides less reimbursement since it’s a company vs. a private citizen. Driving without insurance is illegal in most states and not wise for any driver to do as you can be sued if found to be at fault.
  • All drivers are at-fault - If all drivers involved in the accident shared fault, then their insurance providers will most likely split the subrogation reimbursements. They may split it evenly based on exactly how at-fault their policyholder was. An example would be one insurance company taking 30% while another takes 70% because one driver was found to be more at fault than the other. This depends on your state’s laws regarding collision fault.
  • Partial recovery of payout - A result of subrogation is that your insurance company may not be able to collect all their payout losses. The previous example of all drivers being at fault is a prime example of this. These recouped costs will be divided between you and your insurance provider. The division is based on the deductible you paid and how much the insurance company paid out. It isn’t uncommon for this to happen, but at least you will be going home with some reimbursement.

Based on Fault, What is The Outcome For Subrogation?

As you wait for the results from subrogation, the question of who is at fault has yet to be answered. So, you may not know what to expect from the result. Usually, you don’t find out until the process is over.

Here’s what happens when you are either found to be at fault or not:

  • You are at fault - Don’t expect reimbursement if you are found to be at fault for the accident. Your insurance company will handle the claim, and you will be able to move on with increased premiums.
  • You are not at fault - If you’re not responsible for the accident, then you will be contacted by your insurance provider and informed that they are going to recoup the payout from the insurance claim. From there, you let them do their thing until you receive your deductible refund. If you aren’t contacted, then the subrogation claim didn’t go through. At that point, you can sue the at-fault driver if their fault has been established.

How Long is The Subrogation Process?

On average, the insurance subrogation process is around six months. You can expect it to run longer if the accident was severe and the fault is hard to determine. The more drivers involved, the longer it tends to take as well. If the other party contests the fault, then matters can become even more complicated. The smaller collisions where fault can easily be determined tend to get through the subrogation process the quickest. The starting point is when the insurance company pays out the initial claim.

What Does it Mean to Have a Waiver of Subrogation?

A waiver of subrogation will come into play when you decide that you don’t want your insurance provider to further pursue the at-fault driver and their own insurance provider. Let’s say that the at-fault driver comes to an agreement that they or their insurer will directly reimburse you for the damages with no need for the subrogation process. The waiver states that you relinquish the right to claim from them, rendering the process null and void. Talk to your insurance provider or legal aid if this is the right move for you. A waiver of subrogation is a great way to bypass the month-long process and solve it the quickest.

Is Insurance Subrogation a Bad Thing or a Good Thing?

Subrogation of auto insurance isn’t either bad or good. It’s just a way that insurance companies solve disputes, albeit a lengthy one. The important part is beforehand where injured drivers and damaged cars can receive the payout they need in order to treat and fix them respectively. At the same time, your rates won’t rise as it is being worked out. In the end, it will not cost you anything, and the worst that can happen is that you don’t get your deductible refunded. Odds are, if you’re good at the waiting game, you’ll be good at car insurance subrogation.

Prepare for the unexpected with auto insurance. You never want to be caught up in a collision without coverage. Insurance Navy can help you get low-cost car insurance today. Get a free quote online or call us at 888-949-6289.

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