Understanding Subrogation

Personal Injury

By Sean Lally, Staff Writer

If you’ve been injured by another person’s negligence, you may want to file a claim with your insurance company in order to cover your medical expenses. But what happens when another party is at fault? How exactly does the at-fault party cover your expenses? The process by which an insurer recovers expenses from the at-fault party is known as subrogation. It’s not often written about in legal blogs due to the fact that it happens almost entirely on the insurance side of things, but it’s still good to be aware of this aspect of personal injury law. To that end, the following will briefly outline the fundamentals of subrogation.

The Basics

Subrogation occurs in automobile accident cases, but it can also occur in relation to any case in which one insurer initially covers the costs but does not believe that it is ultimately responsible for those expenses.

Here’s how it usually works in a nutshell: let’s say you’ve been in a car accident that was caused by another driver. After such a collision, you file a claim with your auto insurer, specifying that you did not cause the collision. The insurer will usually ask you to pay a deductible, so that they can cover the damages to your vehicle and any related medical costs, while the liability is being determined.

Once it is determined that another party was at-fault, the insurer will then pursue the at-fault party’s insurance company for reimbursement of all the related expenses. In the event that the at-fault party does not have insurance, your insurance company may pursue the at-fault party directly to recover its costs. Moreover, the company will seek out repayment for the deductible, which they should then give back to you.

Essentially, the insurance company seeks out remuneration from the other party’s insurance company (or the at-fault party if no insurance is available), and in doing so, becomes a proxy for the insured. Thus, technically speaking, subrogation refers to a process of substitution, where one party assumes the right of another party to pursue lawful claims.

This same scenario may also play out with health insurance companies. Let’s say you’ve been injured and your medical expenses amount to $15,000. After covering the $15,000, your insurance company may then seek out reimbursement from the at-fault party – just as above.

How Does This Relate to You?

What does this have to do with the injured party? Subrogation benefits the insured party in a number of ways. For one, it limits the amount of footwork the injured person needs to do, as it is entirely the insurance company’s responsibility to seek out reimbursement and then to refund the deductible. Secondly, in the process of subrogation, the at-fault party pays back the insurer, which in turn can help you, the injured party, maintain lower premiums.


If your case progresses toward legal action, you (or preferably your lawyer) should notify your insurance company. If you end up reaching a settlement, you may end up signing a waiver of subrogation, which essentially prohibits your insurer from seeking out recompense from the at-fault party. This is important to remember, as an insurance company might choose to sue you if they find out that you’ve received damages in addition to receiving payment under the policy. In this case, the insurance company would be seeking out “recoupment” from you.

As in most cases, the rules surrounding subrogation differ from jurisdiction to jurisdiction. The amount of money that may be recovered, for instance, may change depending on the state you’re in. For this reason, it is advisable to consult with a skilled attorney who has experience dealing with insurance companies and who understands the ins and outs of subrogation. They can advise you on your options and help you make the most reasonable choice moving forward.

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