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Subrogation: What Is It and Why Is It Important?

Published: July 2020

If you have an insurance claim, you may hear the term "subrogation." Here's a primer on what subrogation is and how it can help you and your insurer recover post-accident expenses.

Two cars in a fender bender.

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What Is Subrogation?

Subrogation (sometimes shortened to "subro") is a way to protect you and your insurance company from paying for a car accident that wasn't your fault.

Why does subrogation happen?

If you are in an accident and it is determined you are not at fault, the at-fault driver's insurer, also known as a "Third Party Carrier" (TPC), would help pay the repair costs and medical bills. If recovering expenses from the other driver's insurance company is delayed for any reason, your insurance will often step in to help pay for your repairs and other bills.

Subrogation allows your insurer to recoup costs (medical payments, repairs, etc.), including your deductible, from the at-fault driver's insurance company, if the accident wasn't your fault.

A successful subrogation means a refund for you and your insurer.

What happens when fault isn't clearly defined?

If you aren't completely at fault, depending on your state, you may not be fully responsible for paying your own repair costs.

You might decide to file a claim with your insurer, pay your deductible, and let your insurer take care of the rest. Since you're not entirely at fault in this situation, your insurance company could choose to subrogate the other party's insurer to recover all (or some) of the accident costs. You might get all (or some) of your deductible back if that happens. How much you might recoup depends on the laws in each state.

Breaking down the subrogation process

During subrogation, you, the policyholder, don't have to do a whole lot. Subrogation generally happens behind the scenes with insurance companies determining who pays for what.

Always report accidents to your insurer and let it know if you plan on taking legal action or agreeing to a settlement (especially if it involves a waiver of subrogation).

What is a waiver of subrogation?

A waiver of subrogation is an agreement that prevents your insurance company from acting on your behalf to recoup expenses from the at-fault party.

A waiver of subrogation comes into play when the at-fault driver wants to settle the accident but with your insurer out of the picture. Make sure you fully understand this type of waiver before you sign.

Once a waiver is signed, your insurance company won't be able to go to bat for you if something goes wrong since you've waived its right to do so.

Most insurance companies ask that you notify them before signing a waiver of subrogation.

Discuss subrogation with your claim representative

Stay in close contact with your insurer and don't hesitate to ask as many questions as you'd like if your claim is in subrogation. Allstate customers can track claims via My Account or the Allstate© mobile app.

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This content is for informational purposes only and may not be applicable to all situations.

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