What is the “Right of Subrogation” and when should I use it?

An insurance carrier may reserve the "right of subrogation" in the event of a loss. This means the insurance company may choose to take action to recover the amount of a claim paid to a covered insured if the loss was caused by a third party. After expenses, the amount recovered must be divided proportionately with the insured to cover any deductible for which the insured was responsible.

To provide further explanation - in the event you are involved in an accident that is not your fault, your insurance company may agree to pay your claim, but not until you agree to assign your rights to sue the at-fault party.  Subrogation is the process by which you sign over your rights to sue to your insurance company.  This will allow your insurance company to pay your claim and pursue reimbursement from the negligent party. 

Subrogation is common in auto insurance.  As an example, suppose you were hit by an uninsured motorist.  If you carried uninsured motorist or collision coverage on your policy, you could file the claim with your own insurance company, thus avoiding the hassle of suing the uninsured driver for the damages.  At this point though, you are the only one that has the right to sue the uninsured driver, as you were the one they caused damage to.  The uninsured driver did not hit your insurance company, they hit you.  Your insurance company at this time does not have the right to sue them for the accident.

Therefore, as a condition of receiving payment from your company, you will be required to sign over your right to sue to the insurance company.  This signed statement will then give your insurance company the right to sue the uninsured driver and collect the damages.  This process will allow you to receive payment from your insurance company now for the claim and will allow your insurance company to recoup the amount of money they paid you for the claim from the at fault driver at a later time.  It is a win-win for both you and your insurance company.

To learn more about Austin Car Insurance contact us at (325) 597-4222.