What is Insurance Subrogation?

Insurance subrogation is the right that an insurance company has to pursue reimbursement from the at fault party. Subrogation is most common in auto accidents and has become more common in the last few years. These days the auto accident driver exchange forms do not include enough information to know who to pursue in the event of an accident and in these cases its best to start the claim with your insurance carrier.

Here are a few common insurance subrogation scenarios:

  1. The at fault party in the accident will not admit fault to their insurance carrier causing a delay in the claims investigation. To avoid the delay, it’s best to with your carrier and let them subrogate or “fight it out” with the other party.
  2. The at fault party has “gone dark” and is not communicating with the insurance companies causing a delay in the claim process.
  3. The at fault party is uninsured.
  4. The at fault party is underinsured, i.e., does not have sufficient limits to cover your damage.
  5. The fault at the time of the accident is in question.

The Anderson Insurance family has had a few situations over the years when subrogation has come into play. A few years ago, while driving down I-15 in construction traffic the at fault party cut us off totaling our car. The other party’s agent had sold them the lowest property damage limit in Utah, $15,000 which was not enough to pay for the totaled Jeep valued at $25,000. We filed with our insurance company who then subrogated against the other insurance company for $15,000 and then sent the at fault party to collections for the other $10,000.

In another situation our daughter was hit by another car pulling out of the Wendy’s in Draper. The other party did not have insurance coverage so we filed with our insurance company for the $3600.00 in damage, paid our $500.00 deductible and got our car fixed. Our insurance company made payment arrangements with the responsible party and she paid them back $76.00 per month until the debt was paid. Every month we received a check from our insurance company for $76.00 until the $500.00 deductible was reimbursed and the $76.00 payments then went to reimburse the insurance company.

A few other “subro” facts to know:

  • Subrogation is often called “subro”
  • You will have to pay your deductible and hope that the insurance company will get that back as part of the subrogation process. Don’t hold your breath waiting…
  • Insurance companies are often successful subrogating if the other party is uninsured and does not have any assets.
  • Your insurance company cannot subrogate until they have made a final settlement with you and the claim is closed.
  • Every insurance company has a subrogation department where claims are transferred to once the claim has closed. They will communicate the process with you.
  • Even a not at fault claim that had been subrogated will appear on your record and may cause a rate increase especially if you change insurance companies.

You can be subrogated against if you don’t have high enough limits to cover the claim. The best way to not end up on the wrong end of the subrogation is to carry high liability limits. Too often we see auto insurance property damage limits that are too low. Cars are expensive these days and you need to make sure you have enough coverage.

Please reach out with any questions regarding subrogation and to make sure your coverage is sufficient.

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