What is subrogation?

Subrogation is a situation where an insurer, on an insured’s behalf, has a legal right to bring a liability suit against a third party who caused losses to the insured. With subrogation, the insurer maintains the right to seek reimbursement for losses that the insured incurs because of the third-party’s fault. The insurance company collects money from the at-fault party to make up for funds the insurance company already paid out. If the policyholder paid funds as well, even if it was a deductible or copay, this process also gets those funds back. The insurance company has the same rights to seek that compensation as does the policyholder, and if the insured cannot sue the other party, the insurer will also not be able to sue that party. The entire process of subrogation allows obtaining a settlement through insurance to run more smoothly.

Learn more about subrogation

When do I need to be aware of subrogation?

One example of when you need to be aware of subrogation is after a car accident in which another party was at fault, but he or she claimed otherwise. You would probably file a claim with your own auto insurance company in the meantime, even paying a deductible yourself. Through the subrogation process, your insurance company would obtain compensation for the insurance payout and your deductible.

What is important to know about subrogation?

Subrogation can be beneficial to multiple parties, making it an essential service after you’re injured or in an accident. There are some things you should know about subrogation:

While it’s most common in the auto insurance industry, the subrogation process can be used for health care claims and other insured items as well.
Policyholders don’t have to deal with a whole lot when a situation qualifies for subrogation, as it is a process mostly handled by the policyholder’s insurance company.
If you end up in a lawsuit against the at-fault party, you typically can’t pursue subrogation because the settlement would probably include a subrogation waiver.