The purpose of subrogation is to prevent you and your insurance company from paying for damage caused by a third party. Through subrogation, your insurance company can recover money from the at-fault individual on your behalf after you file a claim. Subrogation also keeps rates low for policyholders and allows you to receive a claim payout before fault has been determined.
3 Benefits of Subrogation in Car Insurance
Speeds up the claims process for policyholders.
Refunds insurers for claims if their customer wasn't at-fault.
Keeps premiums low for policyholders who aren't responsible for 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.
The three types of subrogation are legal/equitable subrogation, conventional subrogation, and statutory subrogation. They differ based on where the right of subrogation comes from: legal doctrine (equitable), a written contract (conventional), or legislation (statutory).
Types of Subrogation
Legal/Equitable Subrogation: The right to subrogation is established by legal doctrine, though this right may be modified or eliminated with the existence of a contract. An example of equitable subrogation is when an insurance...
Subrogation is good because it provides a way for insurers to recover costs from at-fault drivers, which helps to keep overall car insurance costs lower. Subrogation benefits both good drivers and insurance companies by making sure the at-fault party is responsible for the damage they cause.
Benefits of Subrogation
Claims can be paid out quickly since insurers know they can recover the costs if you’re found to be not at fault.
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...
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