Subrogation (Sub-ro-what?)

From the Insurance for Dummies by Jack Hungelmann

 As a rule, if your damage is caused by the other driver and you have Collision coverage, collect from your own coverage, especially if your car is not drivable. You are their customer. Your company will almost always be faster and easier to deal with. And, unlike the other driver’s insurance company, your claim won’t be delayed for an investigation. Collision insurance pays to repair your car if it’s damaged in an accident, regardless of who’s at fault. Also, you will spend less in the long run, in spite of your Collision deductible, in states where subrogation (defined below) and comparative negligence (defined in the following section) are allowed.

Subrogation (Sub-ro-what?)

You’re in a wreck. Another driver caused the accident, but you choose to have your auto insurance, under Collision coverage, pay for the damage to your vehicle. Your legal rights to seek reimbursement from the other driver are transferred to your auto insurance company. This transfer of rights is known as subrogation. Your company gets compensated by the other driver’s company.

When your insurance company subrogates against the other driver, it usually attempts to get your deductible reimbursed too, saving you a lot of hassle. For various reasons, it often collects less than 100 percent of the amount that it spent fixing your car. Whatever percentage it collects, you get the same percentage of your deductible back. The bad news is that the collection process often takes six months or more. So when you spend your deductible, don’t look for the cash to come back to you any time soon.