What is subrogation and why should I care about this?

TEDMUS TIP #10: What is subrogation and why should I know this term?

You're in a wreck. Another driver caused the accident, but you choose to have your 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 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 several months or more. So when you spend your deductible, don't look for the cash to come back to you anytime soon.    With that in mind though, if you do have collision coverage, always use the coverage and pay your deductible unless the other driver is 100 percent at-fault. After subrogation, your net cost will always be less than collecting directly from the other driver's insurance. Plus, your claim will be handled much faster and smoother.   Of course, if you don't have collision coverage or your damage is less than your deductible, you have no choice but to collect from the other driver's insurance company.   For more great helpful tips, visit TEDMUS INSURANCE SERVICES online, or call us at 1 (800) 903 5752.