When the subrogation process has the status set to closed, it means that the insurance company either failed or successfully managed to get reimbursement from the at-fault party's insurance company. You can find out your subrogation status and additional details about this process by contacting your representative.
Subrogation is the process that allows your car insurance company to recoup losses from the at-fault driver's insurer for expenses they incurred after paying out a car accident claim. This process allows insurers to compensate you for your accident before determining who was at-fault for the crash, which can sometimes take a long time.
A waiver of subrogation is a legal clause that prevents an insurance company from recovering the money they paid on a claim from the responsible party’s insurer. In car insurance, a waiver of subrogation usually keeps the not-at-fault driver’s insurer from recouping claims payments from an at-fault driver.
Say Driver B ran a red light and hit you when you were driving legally. You need your car repaired soon, but Driver B won’t admit fault, so you file a collision claim with your own insurance company and pay your deductible.
Then, your insurer begins the process of subrogation, negotiating with Driver B’s insurance company to try to replace the money it paid for your claim. You will even get your deductible back if subrogation is successful.
However, Driver B may offer to pay a set sum for the damage if you agree to sign a waiver of subrogation. Signing this waiver would mean forfeiting your right to get any more money from Driver B or his insurance company, regardless of any expenses from the accident that might arise in the future.
The purpose of subrogation is to allow a third party to recover money on behalf of another individual or company. Subrogation is important to insurance companies because it helps them get compensated for claims paid out to policyholders for damages caused by a third party. Subrogation also keeps rates low for policyholders and allows them to receive a claim payout before fault has been determined.… read full answer
Benefits of Subrogation in Car Insurance
Speeds up the claims process for policyholders.
Refunds insurance companies for claims if their policyholder wasn’t at-fault.
Keeps premiums low for policyholders who were not responsible for the damage.
In car insurance, subrogation applies when a car accident occurs and the not-at-fault driver files a claim with their own insurance company. The not-at-fault driver’s insurance company then begins subrogation with the at-fault driver’s insurer in order to recover the amount of the claim. Drivers can often have their deductible reimbursed, too. Without subrogation, drivers would have to wait for fault to be completely determined before receiving a claim payout.
For more information, check out WalletHub’s complete 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.
WalletHub Answers is a free service that helps consumers access financial information. Information on WalletHub Answers is provided “as is” and should not be considered financial, legal or investment advice. WalletHub is not a financial advisor, law firm, “lawyer referral service,” or a substitute for a financial advisor, attorney, or law firm. You may want to hire a professional before making any decision. WalletHub does not endorse any particular contributors and cannot guarantee the quality or reliability of any information posted. The helpfulness of a financial advisor's answer is not indicative of future advisor performance.
WalletHub members have a wealth of knowledge to share, and we encourage everyone to do so while respecting our content guidelines. This question was posted by a WalletHub user. Please keep in mind that editorial and user-generated content on this page is not reviewed or otherwise endorsed by any financial institution. In addition, it is not a financial institution’s responsibility to ensure all posts and questions are answered.
Ad Disclosure: Certain offers that appear on this site originate from paying advertisers, and this will be noted on an offer’s details page using the designation "Sponsored", where applicable. Advertising may impact how and where products appear on this site (including, for example, the order in which they appear). At WalletHub we try to present a wide array of offers, but our offers do not represent all financial services companies or products.