How long is Allstate subrogation?

An example of subrogation is when a car insurance company pays out a claim to a policyholder before fault is determined and then attempts to recover their costs from the other driver. Subrogation is the legal process by which insurers receive compensation from an at-fault party. Subrogation also happens with business/general-liability insurance.... read full answer

Simple Example of Subrogation in Car Insurance

Driver A hits Driver B, who did nothing wrong. Driver B files a claim with her own collision insurance, pays her deductible, and receives a check for the covered amount. Since Driver A was at fault, Driver B’s insurer begins subrogation with Driver A’s insurer in order to recover money equivalent to the amount of the claim and deductible.

In this scenario, fault might take weeks or months to determine, depending on whether Driver A admits wrongdoing. However, Driver B benefits from subrogation because she can receive a claim payout immediately, without waiting for Driver A’s insurance company to pay for the damage once fault is eventually decided.

Examples of Situations Where Subrogation Might Happen

At-Fault Driver Is Uninsured

If you are in an accident and the other driver is at fault but not insured, you may be able to cover your expenses using your own collision or uninsured motorist insurance. Your insurance company may subsequently sue the uninsured driver directly for reimbursement of the claim costs and your deductible. Since they’re suing an individual, not negotiating with an insurance company, this can be a longer process that’s less likely to recover funds.

Both Drivers Are At Fault

An example of an accident where both drivers are at fault would be if you accelerated into an intersection and the light turned red before you cleared it, and, at the same time, another driver ran a red light and hit you, causing $10,000 worth of damage. While both drivers’ insurance companies investigate the accident, you can file a claim with your collision insurance for the $10,000 of damage and pay a $1,000 deductible.

If the investigation determines that the other driver is 60% at fault and you are only 40% at fault, you and your insurer may be able to recover part of your $10,000 collision claim costs, depending on the laws of your state. Generally, because you were found to be 40% at fault, you can only recoup 60% of the costs you and your insurance company paid for the claim. That means your insurance company will try to recover $6,000 of the original claim, and you’d receive $600 of your original $1,000 deductible.

Partial Recovery

If another driver is at fault in an accident that causes $10,000 worth of damage, and your insurance company can only recover 50 percent of the loss ($5,000), this is considered a partial recovery. The partially recovered funds will be divided between you and your insurance company to reflect the percentages of money paid to repair your car.

If you paid only 10% of the total claim, or your $1,000 deductible, and your insurance company paid 90%, or the remaining $9,000 of the total claim, any recovered funds will be divided based on the ratio of your payment versus your insurance company’s payment. With a partial recovery of $5,000, you’d receive $500, while your insurance company would receive $4,500.

For more information, check out WalletHub’s guide to subrogation.

No, you do not have to pay subrogation if you have car insurance. Subrogation is when an insurance company recovers money that they paid out in a claim when their policyholder was not at fault, and if the drivers involved are insured, the process of subrogation will take place between their insurance companies. If the at-fault driver was uninsured, however, the other driver’s insurance company might attempt to make them pay for the damage out of pocket through the subrogation process.... read full answer

In other words, the only time you might need to pay as a result of subrogation is when you don’t have enough insurance coverage. And even then, if you choose to not pay a subrogation claim, the insurer will continue to mail requests for reimbursement or might decide to take legal action.

Subrogation Payment Example

Driver A rear ends Driver B. Driver B files a claim with their own collision insurance, pays their deductible, and receives a payout from their own insurance company, Insurer B.

Insurer B doesn’t want to pay for the damage caused by someone else, so they begin the process of subrogation with Driver A’s insurance company to recover the deductible and claim amount.

How the Subrogation Process Works

If you receive a letter of subrogation from another insurer, you should immediately let your own insurance company know. Car insurance companies have lawyers, subrogation adjusters, and other experts who will handle the demand and let you know if they need any information from you.

If you do not have insurance, a letter of subrogation is a sign that you might need to hire a lawyer. In this case, the other driver’s insurer will likely pursue a settlement or even litigation against you. Individual cases vary, so legal representation can help you determine whether you need to pay subrogation.

For more information, check out WalletHub’s guide to subrogation.

Yes, Allstate insurance rates are competitive for some drivers, including seniors and college students. Allstate car insurance costs an average of $781 per year, or $65 per month.

Allstate’s car insurance rates are based on your driving record and experience, along with factors like the type of car you drive, your ZIP code, your insurance history, and more. Your coverage and deductible choices also impact your final quote, as do your eligibility for discounts.... read full answer

Sample Allstate Car Insurance Rates

Note: These rates are approximations based on sample quotes from Allstate. Actual rates will vary.

To learn more about how we obtained these sample quotes, check out the methodology section of our complete Allstate car insurance review.