What You Need to Know About Auto Insurance Subrogation

Have you ever heard of the term "subrogation" when investigating insurance but really don't understand it?

It's a legal term that is more commonly applied to auto insurance claims, and you need to understand what it is in case you ever need to use it.
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So buckle up and let's dive into: 1) what auto insurance subrogation is;  2) when you should consider using it; and 3) when you should NOT use it.

What is Subrogation?
Think of subrogation as a substitute for you.  In other words, your insurance company is going to stand in your shoes to recover costs from another party who was responsible for an accident or damage.

For example, let's say you were in a car accident that was somebody else's fault. To add to it, there were multiple cars involved, and "fault" is going to take time to hash out.

Subrogation allows your insurance company to go ahead and pay out your claim and then turn around and request the responsible party to reimburse them for that money.

When Should You Use Auto Insurance Subrogation?
Subrogation can be incredibly useful in various scenarios but the overarching reason I think you should use it is when there is going to be a significant delay in getting payment from the responsible party.

For example, let's say your car was totaled, and you have to have a vehicle to get back and forth to work.  It's possible that you could get a rental, but how that gets paid for as well as how long the rental is covered by insurance are important factors to consider.

In the example above, it could take weeks or months to identify who is at fault in order to target them for payment of your claim.  Few people have that kind of time, and possibly immediate outlay of funds, to wait to resolve this situation.

In this case, your insurer can step in and pay out your claim, while then pursuing reimbursement from the responsible party.

When Should You NOT Use Auto Insurance Subrogation?
Subrogation shouldn't be used because it's simply a convenience to you.

Because insurance companies are tightening the reins so much on their financial bottom line, going through subrogation should only be reserved for when you literally don't have the financial resources to pay expenses up front while the claim is being settled. 

This is because some insurance companies may now consider your use of subrogation as a negative on your record when considering renewals (versus having had a neutral impact in the past).  In this case, it might:

- increase your future premiums
- negatively impact your renewal ability with that company

See now why it's important that your agent explain the pros and cons of subrogation?  And this is just one situation where experienced independent agents are worth our weight in gold.

We're your partners in helping you make insurance decisions in your best interest.
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Stay safe out there on the roads, and remember, your friendly neighborhood independent insurance agent is just a call away for all your insurance needs!  706-726-1446.