If you are in a motor vehicle crash and you have collision coverage with your automobile insurance company, your insurance company may pay for the damages to your vehicle regardless of who was at fault. This is often done as a matter of convenience and to expedite payment. If another driver or entity is at fault, your insurance company will then make a claim for reimbursement against the other driver and his or its automobile liability insurance company. This is called subrogation.
In Pennsylvania, your insurance company will include in its subrogation claim your deductible, if any. If your insurance company collects less than the full amount of the damage or has to hire an attorney to collect the damages, it is permitted to reimburse you for only a proportional share of your deductible, according to the Pennsylvania Insurance Regulations.
A potential class action was recently filed in Pennsylvania challenging the applicability of this Pennsylvania insurance regulation. In Jones v. Nationwide, 2010 Pa. Super. 90, the Pennsylvania Superior Court recently upheld this regulation, relying on a federal court decision. Hence, insurers are still entitled to prorate reimbursement of your deductible under the appropriate circumstances.
