How Subrogation Works in Arizona Accident Cases

If you’ve been in a car accident in Arizona, you might hear the word “subrogation” come up during the insurance claims process. It’s not a term most drivers are familiar with, but it can have a big impact on how your settlement unfolds. Subrogation is essentially the process by which one insurance company seeks reimbursement from another after paying out a claim. Knowing how it works can prevent surprises and help you understand where your recovery fits in. An accident lawyer can walk you through the details of subrogation so you aren’t caught off guard.

What Is Subrogation?

Subrogation happens when your insurance company pays for damages (such as medical bills or car repairs) and then seeks repayment from the at-fault driver’s insurer. In other words, your insurer steps into your shoes to pursue the other party who caused the crash.

Example: If you were rear-ended in Downtown Tempe and your insurer paid your medical expenses under your MedPay coverage, your insurance company may later demand reimbursement from the at-fault driver’s insurance.

Why Subrogation Matters for Crash Victims

Subrogation isn’t just about the insurance companies fighting each other—it can also affect you directly.

1. Deductible Reimbursement
   If your insurer recovers money from the at-fault party, you may get your deductible back.

2. Preventing Double Recovery
   If both your insurance and the at-fault driver’s insurance pay for the same expense, subrogation ensures you don’t get paid twice for the same damage.

3. Impact on Settlement
   If your insurer has already paid your medical bills, they may have a “lien” on part of your settlement to recover those costs. This is common in cases involving serious injuries or hospital stays.

Arizona’s Subrogation Rules

Arizona law allows insurers to pursue subrogation claims, but with limits. Importantly, Arizona follows a “made whole” doctrine. This means your insurance company cannot collect reimbursement through subrogation until you, the injured party, have been “made whole” for your damages.

For example: If your losses total $100,000 but the at-fault driver only has $50,000 in coverage, your insurer typically cannot take part of your settlement to cover what it already paid unless you’ve been fully compensated.

When Subrogation Becomes Complicated

Multi-Party Crashes

In collisions involving multiple vehicles—like chain-reaction pileups or rollover accidents—insurance companies may argue over who’s responsible, delaying subrogation and possibly your reimbursement.

Uninsured or Underinsured Drivers

If the at-fault driver doesn’t have enough coverage, subrogation may not fully reimburse your insurer. This is where uninsured motorist coverage becomes critical for protecting your recovery.

Health Insurance Subrogation

If your health insurance pays for accident-related treatment, they may also have a right to reimbursement once your car accident settlement is finalized. This can surprise victims who expect to keep their entire settlement.

How Subrogation Affects Settlement Negotiations

When negotiating with the at-fault driver’s insurance, you’ll need to consider whether your insurer or health plan has a subrogation claim. For instance:

• If you suffered a T-bone crash and your health insurer paid $20,000 in hospital bills, they may expect to be reimbursed from your settlement.

• If you had out-of-pocket costs (like lost wages or pain and suffering) that weren’t covered, the “made whole” rule ensures you’re prioritized before the insurer collects.

Protecting Yourself During Subrogation

1. Track Your Bills
   Keep records of what insurance has paid versus what you paid out-of-pocket.

2. Know Your Policy
   Review whether your policy includes subrogation clauses.

3. Ask About Deductible Recovery
   If your insurer successfully subrogates, you should get your deductible back.

4. Watch for Health Plan Liens
   Some health insurers aggressively pursue subrogation. Understanding their rights upfront can help you negotiate.

Subrogation in Severe Injury Cases

If your accident resulted in catastrophic injuries—such as paralysis or long-term therapy needs—subrogation can involve large sums of money. In these cases, it’s important to ensure the insurer doesn’t take an outsized portion of your settlement before you’ve been fully compensated for medical costs, lost income, and pain and suffering.

Final Thoughts

Subrogation in Arizona accident cases can be confusing, but it’s essentially a behind-the-scenes process where insurance companies work out who ultimately pays for damages. For you, the biggest concerns are whether you’ll be fully compensated before insurers recover their costs, and whether you’ll get your deductible back.

Understanding how subrogation works—and how Arizona’s “made whole” doctrine protects you—can help you make informed decisions during the claims process.