Question: I had an accident involving another car and I believe it is not my fault. But the process is taking long and my auto insurer suggest that I should get my car repaired using my own policy and subrogate after. What does subrogation mean and how does it help me?
Answer: Subrogation is a process where one insurance company gets back the claim payment made to a policyholder from another insurance company. You had an accident where you believe the other side is at fault. However, they are playing hardball and not accepting the responsibility easily. Or their insurer is not dealing with your third party claim as fast as you like. In the meantime, your automobile is sitting in some repair shop and nobody knows what to do. The garage cannot start the repairs and you cannot use your vehicle.
If you have a Collision Coverage you can ask your insurance company to pay for your damages now. This is not the ideal solution as you would prefer this claim to be dealt by third party insurer and you avoid making a claim on your policy. Nonetheless, you waited enough and you want your car back. Not having it is making your life difficult. Unfortunately, asking your insurer to pay for the damages will go down as a claim on your policy and you will need to pay collision deductible.
Luckily, all is not lost yet as your auto insurer can subrogate the claim payment back from the third party insurer. In other words, after you are paid, your insurer keeps pursuing the matter with the third party insurer and finally gets paid. This will result in your favor in two ways. Firstly, the accident will go down as no fault claim and your auto insurance rates will not go up at all or go up very little. Secondly, you will get back the deductible you paid.
Subrogation is something auto insurance companies do to get back the money they had to pay to their innocent policyholders. Sometimes they may decide to go after an individual or company if they have no luck with another insurer (or there is no other insurer) and they believe they can get money. Essentially, they are helping themselves a lot more than they are helping you because they paid much more money than you did for the damages.
Funny enough, they may even need to subrogate themselves. For example, the person you had an accident with may be the policyholder of the same company as you. If the other policyholder is not responding to their requests, not filling the claim questionnaire and so on, they may decide to pay you first since you have alternative coverage. They will then get to their at fault policyholder somehow. If they cannot, they will have to make a judgement at the end. If it is in your favor they will take the money out of one pocket and put it into another. It really doesn’t matter how it happens as long as you get justice.