What Is Subrogation in Insurance?

What is subrogation?

"Subrogation," or "subro" for short, refers to the right your insurance company holds under your policy — after they've paid a covered claim — to request reimbursement from the at-fault party. This reimbursement often comes from the at-fault party's insurance company. If your insurance company's subrogation claim is approved, the resulting proceeds may help cover the cost of your deductible. Bear in mind that you need to have adequate coverage on your policy and use it (including paying your deductible) before your insurance company may get involved in seeking reimbursement.

When does subrogation occur?

Subrogation may apply when you're involved in an accident for which it's determined another party is at least partially at fault. As an example, you're waiting at a stoplight, and your car is rear-ended. You file a claim under your collision coverage and receive a check from your insurer that covers the cost of repairs, minus your deductible. Your insurer may then act on your behalf to seek compensation from the at-fault driver's insurance that equals the amount they paid to you to cover your claim; this is the process of subrogation. If your insurer is successful, they may use the funds received from the other insurance company to reimburse you for all or a portion of your deductible.

Important note: Insurers aren't obligated to pursue subrogation, but some states require insurers to inform their customers when they decide not to. Customers in those states may then attempt to recover their deductible on their own.

How long does subrogation take?

The subrogation process can take weeks, months, or sometimes years to complete, depending on the circumstances of the accident, the complexity of the claim, and the state where it occurred.

Pro tip:

Subrogation can also apply to property and health insurance claims.