What is Subrogation?

Subrogation is a legal term where one party steps into the shoes of another party so as to have their rights against a third party (the responsible party). Subrogation most often arises in insurance matters.

The common example is where you are involved in an automobile accident and the other driver is at fault. If the other driver does not have insurance, your insurance policy will pay for the repairs to your vehicle, minus your applicable deductible. Your Insurance company will then try to recover the funds that it paid to you (or your repair shop) from the responsible party. This is called Subrogation. When the Insurance company pays out any monies on your behalf, they are in essence purchasing your rights to recover against the responsible party. Most often, they will first attempt to work things out with the responsible party, and if that fails, they will file a lawsuit against that person.

In order to prevail at trial, your Insurance company likely will need your testimony in Court to prove what happened in the accident. Unbeknownst to many people, there is actually a clause in virtually all of your insurance policies that says that you have to assist the Insurance company in its Collection or Subrogation efforts. This could mean speaking with an Attorney, Investigator or other individual, or it could mean spending a day or so in Court testifying as to the facts of the incident. If you fail to honor this obligation, there is the possibility that the Insurance Company could file a lawsuit against you, for what would be a "breach of your insurance contract". If you fail to assist the company with its Subrogation efforts, that may be construed as a breach of your contractual duties under the given insurance policy.

Subrogation is not limited to automobile insurance policies. Many of the cases that I handle are for Homeowners’ or other Property Insurance. The scenario might include a Landlord who owns a rental property, then suffers a loss because one of his Tenants negligently causes a fire. The Landlord’s Insurance policy will pay for the repairs to his building, then it will attempt to recover those funds from the Tenant (responsible party). Again, the insured (Landlord) would have the duty to assist the company with its Subrogation or Collection efforts.

Another situation where Subrogation arises is where you suffer an injury as the result of another’s conduct. Your medical insurance carrier will pay for your medical bills/costs, and then may seek to recover those expenditures from the responsible party.