What is subrogation in motor insurance claims?
In the context of Singapore, under the Barometer of Liability (BOLA) system, a subrogation claim is a claim made against the first party by the third party for the first party part in the accident. Subrogation claims can usually affect motorists when they least expect it.
For example, Mr. A was riding a motorbike in 2008 when a saloon car knocked into him from behind. Mr. A suffered some minor injuries and also damages to his motorbike. The accident was promptly reported to the authorities and left to the respective insurers of both parties to sort out the claims.
Mr. A was very sure that he was not at fault and the incident was forgotten. However unknown to Mr. A, although his NCD was not affected, the insurers accorded him a 10% liability in the accident and the saloon car driver 90%. The saloon car insurer, Company A then made a subrogation claim against Mr. A’s insurer, I Company for Mr. A 10% in the damages. As his liability is only 10%, his NCD was not affected according to BOLA agreement but Mr. A will get a claim history of 10% of the damage bill. Even though the 10% only amount to $135 for the total $1350 claims, the claim history will affect his car insurance premium for the subsequent 3 years. The subrogation claim will also stay with Mr. A even if he sold his motor bike and purchased a saloon car.