The typical scenario is that you are involved in a car accident and are found to be at fault and have no liability insurance.
A less common scenario is that you had liability insurance but the injury to the other people was so bad that they used all of your liability coverage and then got money from their own underinsured motorist insurance to pay for the balance of the injuries. This can happen very easily with surgeries running in excess of $30,000 even for arthroscopic procedures. When this happens, the victim’s underinsured motorist insurance will sometimes come after you personally for the balance.
If you have liability insurance, then it is typically no big deal because your insurance will pay off the car repair debt to the other insurer or the other driver. When you don’t….
Property Damage Subrogation
You caused a crash and had no valid insurance or not enough insurance to cover the damage (could be a high-end car or multiple cars damaged) If you don’t have insurance to cover the repairs, then the other driver turns to their uninsured motorist coverage to pick up the repair tab. When the driver does that, they subrogate their claim against you for your negligence to their insurance company. Sometime later the insurance company will come after you seeking to get their money back. First, you will receive collections letters and then if you do nothing, they will sue you for it.
So the question is, what do you do? If you did not cause the crash and have some decent evidence then it may make sense to fight them over it. Use witnesses and photographs. If the money they are suing for is large enough, it may be cost-effective to hire a lawyer to defend you on the grounds that you did not cause the crash. Lawyers will cost around $250.00 an hour on average.
If it is pretty obvious you caused the crash, then this is like any other debt. They want to collect as much as possible, as soon as possible. You can enter into a repayment plan over time or try to scrounge up a portion of the amount owed as a lump sum. Just be sure to put in writing the purpose of any payments you make and what the agreement is.
Can the insurance company really sue me for this? Yes, they can. If it is clear you caused the crash, treat it as you would any other debt. Bankruptcy is an option and makes an effective threat to get the amount reduced.
Bodily Injury Subrogation
This situation used to be rare but is becoming more common. Here the other driver was injured and made a claim for the injury to their uninsured motorist coverage.
This can arise because:
you had no insurance; or
the insurance you had was not enough to cover a serious injury. For example, in Georgia, many people have minimum limits insurance policies which only cover $25,000 in injury liability. If you break someone’s leg and they have $45,000 dollar surgery, then if the victim’s uninsured motorist coverage pays out, they may come after you. It is harder for them to prove their damages in the injury scenario, but again, if it is a significant claim, hire a lawyer to defend you.
In either scenario, do not just ignore the problem because it will not go away. If you receive legal papers, take them to a lawyer and figure out what it means. In Georgia, you only have 30 days to file your legal answer to a lawsuit after it is served (given to you or an adult roommate). If you fail to answer, you admit everything the lawsuit said and you can lose even when it’s unfair.
Our Solutions for People Facing Subrogation Suits
We can save you thousands of dollars in certain scenarios. Fill out the “Email Chris Directly” form to the left, pasting the questionnaire below into the message section with your answers. If you can also email any letters you received from the subrogation entity, letters from your own insurance company and the police report, that will help.
Who is contacting you about the claimed debt:
What insurance company is making the Subrogation claim:
Has a lawsuit been filed yet? (Have you been served with court papers?)
How much are they claiming?
Are they claiming for damage to vehicles or injury to people? Who did the police officer write a ticket to?
Two sentence description of how the crash happened.
Where do you live?
Do you have insurance and if so, with what company and in what amount?
Has your insurance already paid out its limits?
Are you currently employed (this matters because they may eventually seek to garnish your wages)
We will respond within 24 hours with the options that are available to you.
Some insurers are more aggressive than others, like State Farm for instance. They will hound you to the ends of the earth. Remember this, the lawyers bringing those cases are not getting much out of them. Give them a reasonable offer or a payment plan and you have options. If you are getting sued for a substantial sum, consider bankruptcy or the threat of bankruptcy.