What Is Subrogation in Insurance?

Have you ever wondered, 'what is subrogation'? Subrogation is a term used to describe an insurance company’s right to recover money it paid out on a claim from the party at fault for the loss or accident. In this case, the insurance company essentially ‘steps into the shoes’ of the policyholder. This means the insurance company would have the same rights as the policyholder to recover money from the at fault party.  

How subrogation works in insurance

Wondering how subrogation in insurance works? As part of an insurance claim, the company investigates the extent and amount of damage and losses. It also decides who is at fault for those damages and losses. Following that investigation, an insurance company may pay its insureds directly and then seek reimbursement from the person or persons who caused the loss or accident. Subrogation is that reimbursement process.  

Insurers may require or request assistance from the policyholder when they pursue subrogation. This could involve providing certain documentation, a statement, or even appearing at an arbitration or trial. The insurance company may include its insured’s out of pocket expenses, like the deductible, in the subrogation process which if recovered may be returned to the insured.

Example of subrogation

Below is an example of how an insurance company may use subrogation in an auto claim:

On your way home from work one night, you find yourself stopped at a red light when without warning you are suddenly struck from behind. As a result of this rear-end collision, your car is completely totaled through no fault of your own. You file a claim because you have the appropriate coverage, and your insurance company pays for the damages less the deductible. Your insurance company now has an opportunity to pursue subrogation against the driver who caused the rear-end collision to recoup their losses, which may also include your deductible.  

What should auto policyholders know about subrogation?

As a policyholder, you may be asked to assist your insurance company in its pursuit of subrogation. The subrogation process typically takes place between the insurance companies and could involve an administrative process or even the filing of a lawsuit.  

If you have questions about subrogation, don’t hesitate to reach out to your insurance company or agent.  

Call Infinity Insurance Agency, Inc. today at 1-855-478-3705 for a free auto insurance quote or for general information about the subrogation process. 

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