How Your Insurance Company Deals with the Other Driver’s Insurer

After a car accident, you are suddenly thrust into a world of claims, adjusters, and paperwork. You know you have to deal with your own insurance company and the at-fault driver’s insurer. But do they deal with each other? What happens behind the curtain? Do the two companies get on the phone and decide who pays for what?

The answer is yes. There is a constant, formal process of communication and reimbursement happening between the insurance carriers. This inter-company process is a standard part of the industry, and it primarily happens in two ways: through subrogation for the initial payouts, and through liability negotiation for the final settlement.

Understanding this process can help you see the bigger picture of your claim and appreciate why certain steps—like using your own PIP coverage first—are so important.

Useful Information for You: In a nutshell

• Yes, the Insurers Communicate: Your insurance company and the other driver’s insurer have formal processes for communicating and settling financial obligations between them.
• The Process is Called “Subrogation”: After your insurer pays you for a claim that wasn’t your fault (like for car repairs under your Collision coverage or medical bills under PIP), they will go after the at-fault driver’s insurer to get that money back. This is called subrogation.
• Subrogation is How You Get Your Deductible Back: If your insurer is successful in their subrogation effort, they will also recover your deductible and refund it to you.
• Liability Negotiation Determines the Final Settlement: For your main personal injury claim (for pain and suffering), your attorney deals directly with the at-fault driver’s insurer to negotiate your final settlement.
• This Process is Why You Have Insurance: This system allows you to get your immediate needs met by your own insurer, who then takes on the burden of fighting with the other company on your behalf.

The First Step: Subrogation (Getting Paid Back)

Subrogation is the most common way insurers interact, and it is a huge benefit to you as a policyholder.

What is it?

Subrogation is the legal right of an insurance company to pursue a third party that caused a loss to their insured. In simple terms: after your insurance company pays your claim, they acquire the right to sue (or make a claim against) the at-fault party to get that money back.

A Common Tacoma Scenario:

1. You are in an accident in Tacoma that is clearly the other driver’s fault. Your car has $5,000 in damage, and you have a $500 collision deductible.
2. To get your car fixed quickly, you file a claim under your own collision coverage. You pay your $500 deductible to the body shop, and your insurer pays the remaining $4,500.
3. The subrogation process begins. Your insurance company’s “subrogation department” will then send a formal demand to the at-fault driver’s insurance company for the $5,000 they paid out on your behalf.
4. If the other insurer agrees their driver was at fault, they will pay the $5,000 to your insurance company. Your insurer will then issue you a $500 check to reimburse you for your deductible.

This same process happens with your Personal Injury Protection (PIP) and health insurance. After they pay for your medical bills, they will seek reimbursement from the at-fault driver’s liability policy.

The Second Step: Liability Claim Negotiation

While your insurance company is handling the subrogation for the property damage and PIP benefits, your personal injury claim is being handled separately. This is the claim for your non-economic damages (pain and suffering) and any economic damages that exceeded your PIP limits.

This claim is not between the two insurance companies. It is a claim made by you (represented by your attorney) directly against the at-fault driver’s liability insurance.

• Your lawyer will build your case and send a demand letter to the other driver’s adjuster.
• Your lawyer will negotiate directly with that adjuster.
• The final settlement you receive for these damages comes from the at-fault driver’s policy.

These two processes happen on parallel tracks. Subrogation allows your immediate financial needs to be met by your own insurer, who you have a contract with. The liability negotiation ensures that the at-fault party is ultimately held responsible for the full scope of the harm they caused.

Understanding this process can be complex, and it’s one of the key areas where a legal professional can add immense value. If you’ve been in a car accident in the Tacoma area, search the Car Accident Lawyer Directory Tacoma. Compare profiles and find a trusted local attorney who can manage both your own insurance benefits and the liability claim against the at-fault party to ensure you are fully protected.

References

• Washington State Office of the Insurance Commissioner (OIC) – “Subrogation and how it can affect your auto insurance claim”:

  The official consumer guide from the OIC, providing a clear, detailed explanation of the subrogation process in Washington State.

  https://www.insurance.wa.gov/subrogation-and-how-it-can-affect-your-auto-insurance-claim

• NOLO – “What is Subrogation and How Does It Work in a Personal Injury Case?”:

  A reputable legal resource for consumers that explains the concept of subrogation in the context of both property damage and health insurance.

  https://www.nolo.com/legal-encyclopedia/what-is-subrogation-and-how-does-it-work-in-a-personal-injury-case.html