What is Subrogation in Relation to Insurance?

If you’ve recently been in an auto accident, you’re likely hearing unfamiliar terms from your attorney and insurance adjuster. Terms that make you wish they would speak in plain English. Subrogation is one of those terms.

What does it mean? What are insurance adjusters referring to when they talk about a waiver of subrogation?

What Is Subrogation in Insurance?

Subrogation occurs when an insurance company goes after a third party for reimbursement of monies paid during a lawsuit as a result of an accident. For example, let’s say that you have full insurance coverage (both collision and comprehensive). You’re driving to work, when your car gets rear-ended by someone who was texting while driving.

You file a claim with your insurance company and they cover all of your medical expenses and property damage. Your insurance company can then go after the insurance company of the distracted driver who rear-ended you for reimbursement of what they paid to you.

If you look closely at your insurance policy, it will have a section explaining how your specific carrier processes this type of claim. The policy likely includes verbiage stating that you are not allowed to do anything that would compromise their right to subrogation (such as signing a settlement document releasing the other party from liability).

Subrogation benefits both the insurance company as well as the insured: Insurance companies are able to recuperate the disbursed money. In turn, this allows insurers to keep the cost of premiums down and process payments quickly.

Prior to filing a subrogation claim against a third party, the insurance company will first notify you. Any deductibles you paid prior to receiving payments from your insurer will be included in the subrogation claim, so you can be reimbursed for that as well.

This doesn’t mean you can collect double recovery. If your insurance company and the party at fault both pay for your damages, you’ll have to reimburse your insurance company for the money they issued to you.

Why Would You File a Claim With Your Own Insurance Company?

Florida requires all car insurance companies to provide Personal Injury Protection (PIP), which covers up to $10,000 in damages (80% of medical bills and 60% of lost wages), regardless of who is at fault. If your damages are over $10,000, you will have to sue the other motorist for any additional losses. Generally speaking, PIP benefits are not subject to subrogation.

Another circumstance in which you would file a claim with your own insurance company is in an instance where the other motorist is uninsured or doesn’t have enough insurance coverage to pay for your damages. You can file a UM (Uninsured or Underinsured Motorist) claim, so that your insurance company can seek compensation from the uninsured motorist in a separate lawsuit.

What Does “Waiver of Subrogation” in Insurance Mean?

Waiver of subrogation means that the insured waives the right of their insurance company to seek compensation from the party who caused the accident. When a person waives subrogation, they expose themselves to higher fees and risk the opportunity to recover their losses.

Another way to waive subrogation is to sign a document with the other motorist waiving said right. Check your policy to ensure that you don’t breach your own contract with your insurer prior to signing anything.

Call Clark Law If You’ve Been in a Car Accident in Tampa Bay

If you or a loved one were involved in a car accident, call us at (855) 680-4911 or schedule a free consultation. At Clark Law, we have experienced attorneys who regularly represent clients involved in motor vehicle accidents, and we can help you determine the best next step.

Disclaimer: This blog is for informational purposes only and does not create an attorney/client relationship.

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