Auto subrogation is a legal concept that allows your insurance company to pay for your auto accident expenses up front and then pursue recovery from a third party who is responsible for the loss/damage you incurred.
The goal is to ensure that the at-fault party pays for the damages, rather than you, the victim, or your insurance company.
It helps your insurance company minimize its losses and keep the premium rates low by shifting the burden of paying for the damages to the responsible party. At the same time, it allows you to receive compensation for your losses without having to deal with the responsible party directly, which can be time-consuming and expensive.
When is it beneficial to use auto subrogation? Here are 3 typical scenarios:
1) If the at-fault driver does not have enough insurance coverage, your insurance company may cover the remaining costs. In this case, your insurance company may pursue subrogation to get reimbursed for those costs.
2) If the at-fault driver's insurance company is taking a long time to process the claim, your insurance company may invoke their right of subrogation to force the process to speed up. Again, your company initially takes on the financial burden and then pursues reimbursement directly with the at-fault insured's company.
3) You were involved in a car accident that includes multiple parties. You were determined not to be at fault, but determining who is/are at fault is complicated and not be quickly determined. In this case, you could be waiting a long time to have your car repaired and your expenses covered, especially when the case ends up in litigation. By requesting subrogation, your insurer can process the claim themselves, pay for your expenses, and then deal with the appropriate insurance companies to recover their cost.
In these situations, you as the victim only interact with your insurance company. Settlement then takes place between your company and the company(ies) of those determined to be at fault. You don't get involved in any of the behind-the-scenes details.
One word of caution: The at-fault driver may want to settle the claim with you directly and may request you sign a waiver of subrogation as part of the agreement to pay you a certain amount for damages.
If you sign it, it will prohibit your insurance company from being able to subrogate the claim, and it will prevent you from getting additional compensation regardless of any other expenses that may materialize in the future. Before you sign anything, contact your insurance agent for guidance.
Having an established relationship with a local insurance agent experienced in auto insurance will be extremely helpful in ensuring your best interest is served and in moving smoothly through this process.