William T. Wilson

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Understanding subrogation

Car accidents occur far too frequently. Despite government efforts to curb collisions, it appears as though they are on the rise. In the state of Texas, there was a 3.59 percent increase in car accidents between 2015 and 2016. 

Following an accident, drivers need to go through their insurance providers to recover damages. Insurance agencies typically go through a process known as subrogation, and it is beneficial for average drivers to understand what this means and what needs to be done. 

How does subrogation occur?

As an example, say a driver was in an accident because another driver ran a stop sign. The party not at fault would go through the insurance agency to recover damages. For straightforward cases, the insurance provider would likely pay out immediately to get the vehicle back up and running again. 

However, the insurance agency is now out some money. The agency would then consult with the other party’s insurance provider to recover money. Subrogation is the term used to describe the process of one insurance company seeking damages from another. 

How does subrogation affect average drivers?

After a car accident, one driver may have to deal with the other driver’s insurance company. This other organization may attempt to get both drivers to sign forms to expedite the process. However, it is vital to read the fine print. Occasionally, insurance providers will insert a clause into these documents stating that the other driver’s insurance agency cannot seek subrogation. If both drivers sign these documents, then it may be impossible to acquire compensation because one insurance company cannot subrogate the claim. 

Subrogation is also important in matters of partial fault. Many times, a collision is never 100 percent one driver’s fault. Sometimes both drivers are partially to blame. In these instances, an insurance company may only pay off part of a claim. For instance, if a driver is found to be 20 percent at fault, then the agency may only pay out 80 percent of the deductible’s refund. When seeking compensation, it is crucial to understand every aspect of the process.

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