What is Insurance Subrogation?

Frequently Asked Questions About Subrogation

• What is subrogation?
• What is a waiver of subrogation?
• How long does a subrogation take?
• How do you deal with insurance subrogation?
• Expert(s) Who Answered

What is Subrogation?

I've heard the term subrogation used by insurance agents but don't fully understand what it is and how it could benefit me. 

A subrogation is when you're trying to get money back from an insurance payment because someone else is responsible for the loss. 

For example, let's say your house burns down. After an investigation of the fire, it's determined that it was a defective water heater that started the fire.  Your home insurance company is going to pay for the loss of your house, and then they may choose to subrogate against the manufacturer of the water heater to try and get their money back.  

Subrogations are beneficial to insurance companies because it allows them to collect losses from a negligent third party. You have insurance to protect you, but if someone else is responsible for your injuries or damage to your property, a subrogation makes it so that they pay for what they're at fault for. 

What is a Waiver of Subrogation?

I hired an electrician to come to my home and fix some faulty wiring in my house. When he arrived he handed me a piece of paper to sign that says waiver of subrogation on it. What does that mean? 

By signing that piece of paper, you're saying that you will not sue the electrician should something happen as a result of the work he does in your home. This means if he's fixing the wiring to your water heater, and that wiring ends up short circuiting and breaking your water heater, you can't require or ask the electrician to pay the fees to fix your water heater. If the faulty wiring leads to a fire in your home causing damage, you've also prevented the insurance company from suing the electrician to cover the damage. 

In short, waiving the subrogation means you're waiving the right for yourself or your insurance company to ask for their money back from a third-party on a claim. 

How Long Does a Subrogation Take?

I work in the kitchen at a restaurant and I was swapping out parts on the mixer. It short circuited and burnt my hand. I immediately had to go to the hospital and pay my deductible, but the insurance company is saying they're going to ask the manufacturer of the mixer to reimburse me for my deductible. How long will that take? 

Subrogation can take a little or a long time. It depends on how much money you or your insurance company is trying to get back, whether they have to sue for the money, and whether the statutes of limitations in your state come into play. Sometimes an insurance company will determine that the subrogation process is not worth the amount being reimbursed. They might send letters and make a small effort to get the reimbursement but ultimately decide it's not worth pursuing.

Basically you can't put a time frame on a subrogation, but if the claim is clear, insurance companies will work together and usually the subrogation will move in a timely manner. 

How do You Deal with Insurance Subrogation?

I was recently in a car accident that wasn't my fault. But my car is not drivable, and I want to get it fixed and deal with the subrogation later. How do I do that? 

You, the insured, are not the one that will be dealing with the insurance subrogation. Your insurance company takes care of that. Assuming you have collision coverage, you can go ahead and make a claim for the damage to your car. You'll have to pony up your deductible, but the insurance company is naturally going to try and get their money back from the insurance company of the person who collided with you. In fact, most states obligate insurance companies to handle the subrogation and keep you updated on the process. If for some reason they decided not to pursue the subrogation or are having problems receiving the money, they're mandated by state law to write you a letter keeping you up to date of the subrogation status.