Subrogation of Rights
Once your insurance company pays for damages caused to your car then what? Does the insurance company just write it off as a loss? If the person that hit you has no insurance, then the insurance company has a difficult road ahead to recover for the monies paid.
Subrogation of Rights clauses in your policy allow the insurance company to step on you shoes and to go after the responsible party. The monies recover are to reimburse your insurance company. Some insurance carriers will return your deductible in a pro rated basis.
For example, if your deductible is $500 and the total damage is $10,000, then once the insurance company recovers $1,000, you will be paid $50 and the insurance company will keep $950. Some insurance carries will not recover your deductible for you and will tell you to do that on your own.
Subrogation of Rights does not force the insurance company to do anything, but it can put you in a bad spot. Most of the time you do not know the person that caused the damage, so you really do not care whether or not the insurance carrier goes after them. The problem is when the person that cause the damage is related to you. If your grandmother backs up into your vehicle and for whatever reason she does not have an insurance policy active (old auto), then your insurance policy will cover your damages and go after granny.
The insurance adjuster will turn you grandmother into collections and will try to do everything to recover the monies paid to fix your car. This clause helps insurance companies to recover for payments, but sometimes it helps them discourage claims. Read more.
