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How do insurance companies use subrogation to recoup losses?

On Behalf of | Jul 7, 2023 | Commercial Litigation

According to the Department of Transportation, there are over 375,000 trucking accidents every year in the United States. Many of those accidents involved insurance payouts.

In the wake of a trucking accident, the role of the insurance company often extends beyond merely processing claims and providing coverage. One important aspect of the process involves subrogation.

Understanding subrogation

Subrogation becomes relevant once the insurance company pays a claim for an accident where the policyholder is not at fault. This legal provision allows them to recoup the payout from the at-fault party’s insurance company. Specifically, in trucking accidents, they aim to recover damages from the truck driver’s or the trucking company’s insurer, assuming they bear responsibility.

The subrogation process

An insurance company initiates the subrogation process when they identify the trucking company or truck driver who caused the accident and has settled the claim. They then communicate with the at-fault party’s insurer to collect an amount equivalent to the claim they paid. By doing this, the insurance company ensures the policyholder does not shoulder the financial burden for an accident they did not cause.

Benefits of subrogation

Subrogation offers benefits to the insurer and the policyholders. The policyholders benefit from a potentially expedited claims process. Instead of waiting for the at-fault party’s insurer to approve and pay a claim, the insurance company pays the claim first and then seeks reimbursement. For the insurance company, subrogation helps control costs by reducing the amount of money they pay out in claims.

Challenges in subrogation

While beneficial, subrogation can present challenges. Pinpointing the culpable party in a trucking accident is not always straightforward. An insurance company may have to undertake a comprehensive investigation and possibly negotiate with the at-fault party’s insurer. These situations require them to devote resources to establish fault and negotiate reimbursement.

Subrogation is an important tool for an insurance company after a trucking accident. However, it requires adept navigation due to challenges in determining fault and negotiating reimbursement. Amid these challenges, an insurance company’s goal stays constant: serving their policyholders and preserving fairness in the system.


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