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What Is Subrogation in Insurance?


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Eric Rosenberg
Updated April 21, 2022
3 Min Read

When you’re in an accident or file any other kind of insurance claim where someone else is at fault, paying for the claim isn’t always simple and straightforward. In a perfect world, the other person’s insurance would pay for the claim right away, and you can both move on from the accident.

If the payments don’t go so smoothly, subrogation may be required. While that’s a big word, the concept is relatively simple. Keep reading to learn more about subrogation in insurance and how it may impact your insurance claim.

What Is Subrogation in Insurance?

Subrogation is an insurance term for when your insurance company pays for an accident that wasn’t your fault and is later reimbursed by the at-fault driver’s insurance. There are several situations where subrogation could be necessary.

For example, if you’re in a car accident and there’s no clear determination of fault right away, your insurance company may cover your repairs or medical costs as they’re incurred. But if the accident is later determined to be the other driver’s fault, your insurance company can seek to get reimbursed for any costs it already paid for your claim.

In the event of a successful subrogation, your insurance company can recoup all costs from the other driver’s insurance company. This can also include a refund of your deductible if you had to pay one. For you and your insurance company, subrogation is a good thing.

How to Deal With Insurance Subrogation

If you were in an accident and it was someone else’s fault, you should work with your insurance company through the subrogation process. Insurers have subrogation professionals who spend their entire day helping with cases just like yours. In subrogation, your insurance company is on your team trying to get reimbursed for out-of-pocket costs that someone else should have covered.

If you are the target of a subrogation claim, work with your insurance company through the process. It’s in your insurance company’s interest to defend against the claim and avoid a payout.

In either case, the advice is the same: trust and work with your insurance company. If the other insurance company or its representatives call or write, it’s best to speak to your insurance company or legal representative before answering any questions.

What Happens During the Subrogation Process

During subrogation, the insurance companies work together to determine fault and ensure the correct parties pay for any damages and other liabilities. For straightforward accidents, this process can happen pretty quickly. However, when disputes or questions about fault arise, subrogation can take some time to complete.

Suppose you were injured or suffered damages from an accident and the other party’s insurance is slow to pay. In that case, your insurance company may step in and cover the costs temporarily, seeking reimbursement later through subrogation. This helps you get repairs quickly, even if the other insurance company has more questions or needs additional time to process the claim.

If someone else is seeking reimbursement from your insurance company, you should work with your insurer to handle any questions about the accident. During this time, your insurer may ask you questions or perform an investigation to confirm fault before reimbursing the other party.

Subrogation Insurance Example

Let’s say you were in a minor fender bender that was someone else’s fault. If subrogation is involved, these are typical steps you may encounter along the way:

  1. The car accident: If you are involved in an accident, and it’s the other driver’s fault, you will need to file a claim with their insurance company. It may be a good idea to let your insurer know what happened, though your insurance is not liable to pay.
  2. File a claim with their insurance: You file a claim with the at-fault driver’s insurance company for repairs and medical bills.
  3. Your insurance company covers some or all costs: After a delay, your insurance company steps in and makes payments for the claims, so you don’t have to go without funds while the other insurer gets the payment sorted out.
  4. Your insurance files a subrogation claim: Your insurance company files a subrogation claim with the at-fault driver’s insurance company to get reimbursed for the funds they’ve paid you.
  5. An investigation occurs (if necessary): If needed, investigators from both insurance companies determine who is at fault and liable for payments.
  6. Your insurance gets a reimbursement: Assuming the other party is determined to be at fault, your insurance company is reimbursed by the other insurance company.

What Is a Waiver of Subrogation in Insurance?

While you may be less likely to see this with personal insurance, some businesses require vendors to have insurance that includes a waiver of subrogation endorsement. A waiver of subrogation is an addition to your insurance that prohibits your insurance company from seeking reimbursement through subrogation.

A waiver of subrogation may only apply to specific companies or individuals, or it could be a blanket waiver of subrogation that applies to all third parties. Because a waiver of subrogation can prevent you and your insurance company from being reimbursed, it’s best to avoid this type of endorsement on your insurance when possible.