What You Need To Know About Subrogation


In cases where insurance companies have paid claims, they can reserve the right of subrogation to try to recoup their losses. This is usually seen in personal injury cases involving vehicle accidents but can happen any time that third party causes an insurance loss to the insured. If you get a subrogation letter, there are things you will need to do, with the first being understanding the definition and process of subrogation.

What Is It?

The definition of subrogation is the act of one party or person standing in for another. In legal matters, it refers to the right of the insurance company to seek compensation on behalf of their insured from the third party who caused the loss. Sometimes portions of the damages awarded is returned to the insured and others the damages stay with the insurance company, depending on which costs were covered by which party. Receiving and ignoring a subrogation letter, whether you are the responsible party or not, is not illegal, but it can help you resolve matters quickly and without litigation.

How Do You Handle It?

There are two ways you can get a subrogation letter, from your insurance provider if they are seeking damages on a claim you filed or from another insurance provider if they are seeking damages from a claim you caused. In the first case, your insurance company is seeking more information from you about your claim and providing that information can help keep premiums low.

If you were involved in an accident and the insurance provider for the other party sends you a subrogation letter, they are informing you of the claim they paid and asking you for a payment agreement. Ignoring this can extend the matter and may result in a lawsuit. If you agree that you were responsible, negotiating a settlement after the first letter can help you avoid the costs of a trial. If you do not agree on your responsibility, then it is a good idea to hire a lawyer and use the subrogation process to help prove fault.

How Long Does It Take?

The main determinant in how long subrogation takes is how well the parties involved agree on where the fault lies. After an accident, the insurance companies of those involved will investigate to determine what happened, what damages were caused and who is at fault. If the companies agree, then claims are paid accordingly, and the provider of the injured party can seek compensation from the responsible party. This can mean a quick settlement in a month or two. If they do not agree, and a mediator cannot resolve the matter, then each insurance company will usually pay the claims of their insured and seek compensation from the other party. This can result in lengthy court battles and drag on for a year or more.

The subrogation process helps insurance companies and their policyholders reduce the financial impact of injury claims. These cases usually result from vehicle accidents and can take anywhere from a couple of months to more than a year to be fully resolved. When you receive a subrogation letter, it is best to deal with it quickly by providing requested information, reaching an agreement with the insurance company or hiring a lawyer to refute responsibility for damages.

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