What Is Subrogation in Insurance and Why Is It Important?

When you file an insurance claim, your insurance company may step in, pay for your damages, and then go after the responsible party to recover what they paid. This behind-the-scenes process is called subrogation, and while you may never directly deal with it, it can affect your deductible and even your premium over time. Let’s break it down.

What Is Subrogation?

Subrogation is the legal right your insurance company has to seek reimbursement from the person (or their insurer) who caused the loss. Once your claim is settled, your insurance company may pursue that responsible party to recover what they paid on your behalf.

A Simple Example: Imagine someone rear-ends your car. You file a claim with your own insurance company, and they pay for the repairs to your vehicle. Later, your insurance company may seek repayment from the at-fault driver’s insurer. This process is subrogation.

How Subrogation Affects You

• You Get Paid Faster: Your insurer can settle your claim promptly, without waiting for the other party's insurance company to take responsibility.

• You May Get Your Deductible Back: If your insurer recovers the full amount from the at-fault party, they may reimburse your deductible.

• It Helps Control Premiums: When your insurance company recovers money from other parties, it helps reduce overall claim costs, which can contribute to more stable premiums.

  
  

Can You Waive Subrogation?

Sometimes, especially in commercial contracts or leases, you may see a waiver of subrogation clause. This means one party agrees not to pursue the other (or their insurer) for damages, even if the other party was at fault. It is important to talk to your insurance agent before agreeing to a waiver of subrogation, as it may affect your coverage.

The Bottom Line

Subrogation helps streamline the claims process, ensures the responsible party is held financially accountable, and can help you recover your deductible. While it often happens behind the scenes, understanding how it works gives you a better picture of how your insurance policy protects you.

Have questions about how subrogation works or need help with a claim? Our team at Tapley Insurance is here to guide you every step of the way.

(207) 363-7894 | www.tapleyagency.com | 300 York St . PO Box 808 . York, Maine 03909