Summary: Subrogation helps carriers reclaim compensation that is owed after a loss that may otherwise never be recouped. For example, subrogation in insurance can involve seeking compensation after an uninsured driver doesn’t help restore damage to your vehicle. There are waivers of subrogation that can give up a carrier’s right to pursue such legal matters as well. Furthermore, because legal issues can be a headache, drivers and homeowners need to understand their resources when facing this process. Estimated Read Time: 3 mins
Insurance is there to help you restore your property when there is a qualifying loss, however, when this isn’t possible because of the fault of another, legal matters sometimes become necessary. Known as subrogation, carriers can recoup losses that aren’t as straightforward when another party isn’t properly covered.
What Is Subrogation?
Subrogation involves one party paying another’s debt and seeking reimbursement. While individuals are rarely directly involved, understanding the process is beneficial, as it’s commonly used in the home and auto insurance industry.
A subrogated claim entails insurers reimbursing policyholders for damages caused by third parties. This process combines equitable and conventional subrogation, with insurers having both legal and contractual rights to seek reimbursement.
There are three forms of a subrogation claim you might see:
● Legal/equitable subrogation stems from legal doctrine, which can be modified by contracts.
● Conventional subrogation relies on written contracts, granting rights independently or modifying legal subrogation.
● Statutory subrogation is established by legislation, enabling compensation from parties without direct legal ties.
What Is a Waiver of Subrogation?
A waiver of subrogation relinquishes the insurer’s right to seek compensation from a negligent third party. Common in some contracts and leases, it prevents insurers from pursuing claims against other parties for covered losses, reducing the risk of lawsuits.
Accepting a waiver prevents insurers from recovering damages paid and offers additional protection across industries. It streamlines claims processes and minimizes litigation.
In auto accidents, presenting waivers of subrogation allows at-fault parties to settle claims without insurer involvement. Acceptance forfeits future claims, necessitating careful consideration and possibly consultation with insurers or attorneys.
How Long Does an Insurance Company Have to Subrogate?
In the state of Texas, insurance companies retain the right of subrogation for two years regarding both property damage and personal injury claims. The length of time does vary from state to state, however, for example, carriers in Colorado have three years for personal property damage and personal injury claims by comparison.
How To Deal with Insurance Subrogation
Subrogation law can be a difficult, complex legal matter to attend to. There are different ways you can prepare if you are ever faced with the situation and resources available. While this is not legal advice, as all legal advice should come from a qualified, licensed professional, this guide can help you get a better understanding of where to start:
Gather Evidence
When facing a subrogation insurance claim, gathering evidence is paramount to disputing your case effectively. Begin by documenting all relevant details surrounding the incident, including photographs, witness statements, and any official reports.
This evidence can help establish the facts and strengthen your position during negotiations. Be thorough in your documentation and preserve any relevant documents or correspondence for reference.
Contact Your Insurance Carrier
Once you’ve gathered evidence, promptly inform your insurance carrier. These companies typically have specialized subrogation departments to handle such cases. They’ll kickstart the subrogation process by seeking reimbursement from the at-fault party’s insurer.
Your carrier will advocate for you, aiming to recover any incurred damages or losses. Maintain open communication with your insurer throughout to ensure they have all of the necessary details to pursue your claim effectively.
Hire Legal Representation
In complex subrogation cases, legal representation might be advisable. Attorneys experienced in this area can provide crucial guidance and advocacy if disputes arise.
They’ll review your case, negotiate with opposing parties, and represent your interests in legal proceedings as needed.
If you face challenges or uncertainties during the subrogation process, consulting with a lawyer can help safeguard your rights and interests.
Sources:
1. What Is a Waiver of Subrogation? Types and Reasons For Needing, Investopedia. Accessed February 2024.
https://www.investopedia.com/terms/w/waiver-of-subrogation.asp