Subrogation and comparative fault

On Oct 19, 9:02 am, mny....@gmail.com wrote:
> Hi. I recently got into accident with both parties' insurance
> companies decided it is partial fault (50-50)

You don't _have_ to accept their determination of relative fault; that's what lawsuits are for, when there is a disagreement on a material fact, and a lawyer maybe could have helped you negotiate a different split.  Maybe it should have been 70-30, or 100-0, or whatever your lawyer could convince the adjuster a judge or jury might have found if the case had to go all the way to trial.  But apparently, you didn't question it, and you accepted your collision insurer's payment on the basis of that 50-50 split.   So I think you're stuck with that now (having caused the other party to change position (make a payment to you) in reliance on your inaction, you're "estopped" to argue otherwise, is the legal term).  But I don't know the law of your state (which you don't happen to mention where it is), so I could be wrong.

> I received estimate from wawanesa, my insurance, about $1000 to fix
> the damage. Since my deductible is $500 then I received $500.

Fair so far, right?

> Wawanesa promised to help to deal with the other party's insurance,
> AAA insurance, to collect the money.

They're supposed to do that, when you accept a benefits payment from them under your own collision coverage.   What they maybe didn't tell you is, they are also trying to get their _own_ money back from the other guy's insurer.   This is called a "subrogation" claim, where one insurer (or whoever) who has paid a claim that, by rights, should have been paid in whole or in part by someone else (the other at-fault driver) "steps into your shoes" so to speak, and is "subrogated" (replaces you) as the one who has the right to be reimbursed, if and when they do recover anything from the responsible party or his insurer.

In some states, the subrogated insurer has to be paid back _in_full_ before the policyholder gets _anything_ back on his deductible.  After all, you paid a lower premium to accept the risk that you might have to put up your deductible in event of a claim.   If you wanted to make sure your own money was not at risk like the insurer's money was, you could have opted for a lower deductible, or no deductible.   Of course, those options would have cost you a higher premium.   So, just like the insurer did when they calculated your premium, you played the odds, and in this case, you had to put up.   A deductible wouldn't mean much if you had the right to be paid back first while the insurer, who accepted the main risk on your behalf, got left holding the bag.

In other states, the insurer is required to pro-rate any recovery, percentage-wise, between what they paid on your behalf, and what you paid for yourself (your deductible).  It sounds like you're in one of those states.  If this had been a $50,000 claim and you had a $500 deductible, the insurer would have gotten back 99 cents out of every dollar of whatever they were able to recover from the other guy, for every 1 cent they paid you back.  Since your actual claim was smaller, so that it just happened your deductible was equal to the amount the insurer paid for you, you and your insurer each were entitled to get half of what they were able to recover from the other guy.

> Ok, I let them do that.

By accepting their payment under your collision coverage, you didn't have any choice.  Read the terms of your policy.  You authorized them to do that for you when you bought the coverage, and you gave up the right to do so on your own (unless you intended to fight the other guy completely without the help of your own insurer, i.e. without accepting any benefits under your own coverages).   TANSTAAFL.

>  Few weeks later, wawanesa sent me $250 for
> "50% deductive discount".

Now do you understand why they did that?

> I called AAA about the claim, adjuster said they sent wawanesa $500
> for the damages.

Half of which reimbursed their collision claims payment to you, and half of which reimbursed your deductible.

> Now, why would wawanesa not send me the $500 they got from AAA?

Because they were entitled to half of it.

> Instead they gave me 50% discount of deductible for $250?  Is this
> legal for wawanesa to grab my money from AAA and not forwarding it to
> me??

It's not your money.   Half of it's their money.  Who paid for the collision repairs?   You paid half and they paid half.   You each get reimbursed proportionately.

> Please explain if anybody knows why, since I would have dealt with AAA
> directly and got the payout of $500 straight.

If you had done that, your insurer may have been able to take other adverse action against you, including possibly suing you or filing a criminal insurance fraud claim; read your policy (and the law of your state) to see what all their available remedies are.  Insurers don't like people who steal their (stockholders') money by filing false or fraudulent claims (which is what you would be doing, if you contacted the other guy's insurer and demanded full payment without mentioning that your own insurer had a subrogated interest in your recovery).

You got a square deal.  You had to pay half of your deductible because the crash was half your fault.   Hope this puts your anxieties to rest.

--
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Mike Jacobs
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