Subrogation is a legal term that refers to an insurance company’s ability to seek reimbursement from a third party for the money it paid out on a claim. Specifically, it is the ability of an insurance company to seek reimbursement from the party responsible for the accident that resulted in the claim.
Sometimes a person has to make an insurance claim through their own insurance company even when they weren’t at fault for the accident. The insurance company will pay out on their insured’s claim, but ideally it is the person who is actually at fault for the accident that should be paying for the damages. That’s where the concept of subrogation comes in.
It is the insurance company’s legal right to recover the money they’ve paid out by pursuing a claim against the at-fault party, which typically means pursuing the claim through the at-fault party’s insurance company.
Here’s an example of how subrogation works. John Smith is out driving his car when he is rear-ended by another car (driven by Allan) through no fault of his own. Allan’s insurance company is taking a very long time to process John’s claim.
In the mean time, John needs his car repaired so he can get to work every day. He decides to use his own insurance company to get the money he needs to fix his car. Because John was not responsible for the accident, John’s insurance company can seek reimbursement for the payment from Allan’s insurance company.
Subrogation can come into play in personal injury lawsuits as well. Subrogation allows the insurance company to “step into the shoes” of the person with the legal claim (the plaintiff) to seek reimbursement for money it has paid out to cover the plaintiff’s losses.
For example, suppose that Allan did not have car insurance, so John had to take him to court in order to get financial compensation for the accident. John files a personal injury lawsuit against Allan, and John wins the case. John’s insurance company, which had paid to fix John’s car, has a right to part of the money John was awarded.
If you have been injured in a car accident, Fears | Nachawati can handle the insurance claims process on your behalf, including any issues related to subrogation. We are a team of