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Understanding how insurance subrogation works

On Behalf of | May 9, 2023 | Insurance Law |

You may have heard the word “subrogation” if you have recently had property damage or an accident and have spoken to your insurance company. While this legal term is intimidating to some Washington residents, understanding the concept can help you look out for your best interests if involved in a subrogation claim.

Subrogation defined

In insurance law, the subrogation process allows one party to act on another’s behalf to pursue legal action. For example, if you get into an auto accident and the other party is at fault, your insurance company will pursue the other person’s insurer for compensation on your behalf.

How the process works

After a car accident, even if the insurers have not determined which driver was at fault, your insurer may cover your car repairs and medical costs. They get reimbursed by the at-fault party’s insurance company for the money they paid you, including any deductible you paid, through the subrogation process.

During subrogation, the insurance companies typically work with each other to determine payment details, and the policyholder has no involvement. However, suppose the person at fault in the accident had no insurance or insufficient insurance to cover the accident victim’s costs. In that case, the insurance company may use a subrogation claim directly against the at-fault person to pursue reimbursement.

How subrogation affects the policyholder

Your insurer may still ask you to cover your deductible fee if you are not at fault for a motor vehicle accident before they pay for your car repairs and any medical expenses. By law, the insurance company must seek reimbursement for your deductible as part of their subrogation claim to the other party’s insurer. Subsequently, the policyholder should receive a refund for their deductible. However, if you have been deemed partially at fault for the car accident, you will only receive a percentage of your deductible back.

Waiving subrogation

In some cases, you might get asked to waive your right to subrogation. In this case, if you accept the waiver, your insurance company may no longer be able to seek reimbursement on your behalf, even if you are unsatisfied with a settlement offer from the other party. If you were the at-fault party with no insurance, you might need to negotiate a settlement directly with the injured party’s insurance company.

Understanding how subrogation works can help you to advocate for yourself whether you are the injured party or the one at fault in an auto accident.