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Car accidents happen, and often. When they do, the resulting costs can be astronomical.
Subrogation allows your insurance company to pay your claim quickly and then work to recover the money from the at-fault driver’s insurance company.
What is subrogation?
Subrogation gives insurance companies the right to seek compensation from the insurer of a person at fault in an accident. When a claim is assigned, you give your insurance company legal authority to pursue a case to recover compensation it paid you following an accident. This allows your insurer to pay your claim quickly and then take action against the responsible party to recover those funds.
Suppose you are involved in an accident and the other driver is at fault. The other party’s car insurance is usually responsible for covering repair costs, medical bills, and other expenses. If someone else is at fault after an accident, you can make a claim against their insurance company. Or you can make a claim with your own insurance company e.g. B. A claim for collision insurance for your vehicle damage.
After your insurer has paid the claim, they can file a subrogation to recover the monies paid out. By taking over the claim, the insurance company is trying to recoup the money it paid out for claims (and your deductible) for accidents that were not your fault.
Assignment claims are asserted primarily against the insurance company of the other person. But if the at-fault driver wasn’t insured at the time of the accident, your insurance company may try to prosecute the driver instead.
What is the purpose of subrogation?
The main purpose of subrogation is to make it easier for you to get quick and fair compensation after an accident. Recourse allows your insurance company to ensure your claim is processed in a timely manner, and then have an opportunity to recover the cost.
How does the subrogation work?
This is easy for the policyholder. Insurance companies usually regulate the subrogation among themselves behind the scenes.
Regression usually begins with one insurance company sending a recourse letter to the other insurance company and the at-fault party. This letter contains the details of the claim, including the amount of the claim paid out by the insurance company. From there, the insurance company works with the other party’s or individual’s insurance company to process the recourse claim.
As soon as the insurance company’s claim for recourse has been clarified, the insured will receive letters informing them of the settlement. If you were not at fault and paid a deductible as part of the claim, that amount may also be recoverable as part of the recourse settlement, depending on your state’s laws.
However, there may be cases where the insurance company fails to reimburse the full cost of the claim. If there are questions about who was at fault, or if the guilty party’s policy limits are less than the cost of the claim, regression may result in a partial refund. In this case, you may not get your excess back.
In some cases, there may be a disagreement as to who was guilty or how much compensation should have been paid. In this case, insurance companies use mediation to resolve the dispute or, in some cases, go to court.
Examples of subrogation
Let’s take a look at some scenarios that could result in your insurance company filing a subrogation against another party.
Suppose you made a collision insurance claim for damage to your vehicle after you were hit by another driver who was responsible for the accident. Your insurance company will pay your claim and may decide to file a recourse claim with the other person’s insurance company to get the money back.
Or say you went through a green light at an intersection and an uninsured driver ran a red light and injured your neck. You could make a claim on your uninsured motorist coverage. Then your insurance company might decide to sue the driver to recover their losses.
What to Expect During Subrogation
The process of regression differs depending on who was responsible for the accident. While it’s never ideal to be at fault in an accident, there can be instances where this does happen and a recourse can be filed against your insurance policy. Here’s what you should expect from both scenarios.
If it’s not your fault
The claim process is generally simple if you were not at fault for the accident. When your insurance company files a subrogation against another party, you typically receive a letter or phone call from your insurance company regarding the claim. You can get both. From there, the insurance company will take the lead to work with the responsible party to obtain reimbursement for the damage.
Unless there are mitigating circumstances, the claim is usually settled between the insurance company and the other party. Once it does, your car insurance company will let you know that the claim has been resolved. If you paid an excess, you may also receive a refund check for that amount.
Some recourse claims can be more complicated, especially if the other party denies liability or is underinsured. In these cases, you may need to provide your insurance company with more information in order to resolve the claim.
If it’s your fault
If you are at fault for the accident, your insurance company will take care of the subrogation. You may receive a letter from the other party’s insurance company, your insurance company, or both informing you of the subrogation. If you receive a letter from the other party’s insurance company, be sure to notify your insurer so they can process the claim internally.
As a rule, the subrogation is paid for by your insurance company and you have little to do with the process. If there are questions about the accident and liability, you may need to provide more information to your insurance company. If the insurance companies cannot agree on the claim, a lawsuit can be filed to resolve it.
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Frequently asked questions about subrogation
What are the benefits of subrogation?
There are a few different benefits of subrogation. First of all, the insurance company is able to expedite the payment of your claim, allowing you to get your car fixed in time or pay your medical bills.
Subrogation may result in receiving yours car insurance deductible Money back, which reduces your expenses related to the accident. And by recovering the money for the claim, the insurance company is in a better financial position to prevent your premium costs from increasing.
What is a waiver of recourse?
A recourse waiver is a document that prevents your insurance company from making a recourse claim to claim reimbursement of claims payments from the guilty party. You may be asked to sign this waiver as part of a settlement agreement with the guilty party.
By signing this waiver, you make it impossible for your insurance company to recover the money it paid for a claim for damages caused by the other party. As such, it’s always a good idea to discuss the waiver with your insurance company before signing it.
How long does the assignment take?
The recourse process can take weeks or even months, according to Progressive. The time it takes to settle a recourse claim may vary depending on the complexity and condition of the claim.