Does Subrogation Affect Credit? (2024)

Subrogation does not affect credit scores or credit reports directly. Subrogation is a process where an insurance company seeks to recover funds from an at-fault third party after making a claim payment to a policyholder for damages resulting from a car accident. The process is generally separate from credit scoring.

However, if you were at fault for a car accident, then you or your insurance company could be responsible for reimbursing any insurance company that paid out claims to a policyholder because of the accident. This could lead to a lawsuit against you, which may result in a court order for you to pay damages. The judgement itself will not show up on your credit report, though it may impact your ability to borrow money since lenders can find judgements via public records.

Key Things to Know About Subrogation

• Subrogation is typically triggered when the policyholder’s insurance company pays for damage to the policyholder’s vehicle or their medical expenses that were a result of a car accident caused by someone else.

• Subrogation can take time, and all insurance companies involved will need to investigate the accident to determine who is responsible for the damages and how much they should be held accountable for.

• If the subrogation process is successful, the insurance company that reimbursed its policyholder may be able to recover some or all of the costs it paid out on their behalf. If the process is unsuccessful, the insurance company may need to raise the policyholder’s premiums to cover the costs of the claim.

If the policyholder’s insurance premiums increase as a result of subrogation, this could indirectly affect their credit score. If they are unable to pay the more expensive rates, the unpaid premiums could be sent to collections, which could hurt their credit.

To learn more, check out WalletHub’s guides to car insurance subrogation and what affects your credit score. You can also check your latest credit score for free here on WalletHub.