Washington State Office of the Insurance Commissioner

Subrogation and your rights


Subrogation allows your insurance company to recover the costs they’ve paid for your injury or property damage claims from the person legally liable for the injury or property damage. For example, if your insurance company pays your doctor for your treatment following an auto accident and someone else was at fault for the accident, legally your company can seek reimbursement from the at-fault person (or his or her insurance company).

However, if your insurer pays your medical bills and you accept payment for those same bills from the at-fault party, your company may seek reimbursement from you.

 

 

Recovering your deductible

Your company must include your deductible in its subrogation demand to the at-fault party. Once it recovers any costs, your company must first reimburse you for the deductible you paid as a result of the loss. Your company cannot deduct expenses from the deductible recovery, unless it retains an outside attorney to collect the money. The company must keep you informed of its recovery efforts.

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Your obligations to your company in the subrogation process

During the subrogation process, your insurance company will expect your full and complete cooperation. You must notify your insurance company in advance if you intend to agree to a settlement with the at-fault person or their insurance company. This will ensure you do not risk your company’s right to subrogation. It is important to read your policy so you understand your rights and responsibilities.

These obligations should not interfere with your right to receive first consideration when it comes to receiving your benefits and full payment for the injury and damages you suffer.

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When companies cannot agree

Sometimes, companies can’t agree on the amount owed, or even who is at fault. In this situation, the companies file inter-company arbitration. An independent insurance professional reviews both sides’ facts and makes a decision. This decision is binding on both insurance companies. It can take several months to get a final arbitration decision. You can keep track of the process by staying in touch with your company’s subrogation department. 

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When your company decides it’s not worth pursuing subrogation

Your insurance company may decide the cost to pursue subrogation is more than they would recover, and decide not to pursue subrogation. Their decision does not stop you from pursuing recovery from the at-fault party or their insurance company on your own, or through legal action.

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Subrogation and your consumer rights

Previous court cases determined the insured person’s financial interest comes before an insurance company. As a result, if the at-fault party’s limits are not enough to cover your loss, your insurance company may not recover all of its payments.

Your insurance company also cannot deny paying you additional benefits under the terms of your policy while it waits for reimbursement.

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