Subrogation after a car accident is your own insurer taking over your right to sue the driver who caused the crash, to the extent of what it has already paid you. It is not a claim against you and it does not reduce what you are owed. It decides who collects which part of the money at the end, and it is why a letter arrives naming your insurer as a party to a claim you thought was yours.
The rule is statutory in all four Atlantic provinces, and the wording is nearly identical in each.
The Statute Gives the Insurer Your Rights Once It Pays
Section 266 of New Brunswick’s Insurance Act says an insurer who makes a payment under a contract is subrogated to all rights of recovery of the insured against any person, and may bring an action in the name of the insured to enforce them. Section 149 of Nova Scotia’s Insurance Act says the same thing in the same words. Prince Edward Island and Newfoundland and Labrador carry the equivalent provision.
Two things follow. The insurer is not making a new claim, it is standing in yours. And the action can be started in your name whether or not you are the one driving it.
A Shortfall Is Split in Proportion to What Each Side Lost
The subsection that matters to an injured person is the second one. Where the net amount recovered, after the costs of recovery, is not enough to give complete indemnity for the loss, the amount is divided between the insurer and the insured in the proportion in which each bore the loss.
That is the answer to the question people actually ask. If the driver at fault has a policy limit that does not cover everything, your insurer does not take its money off the top and leave you the remainder. The shortfall is shared according to how much of the loss each of you carried. The New Brunswick Insurance Act sets it out at section 266.
Your Deductible Comes Back Out of a Successful Recovery
The deductible is the part of the loss you bore yourself, so it is part of your share under the proportionate rule. Where the insurer recovers in full from the driver at fault, the deductible is returned to you. Where it recovers part, you get your proportion of it.
Insurers do not always volunteer this. Ask, in writing, what happened to the subrogated claim and what your share of the recovery was.
Who Controls the Action Depends on Whose Money Is at Stake
Where your only remaining interest is the deductible, the insurer has the carriage of the action. Where your interest is larger, and you and the insurer cannot agree on which lawyer to instruct, on the conduct of the action, on an offer of settlement or on how a payment into court is divided, either of you can apply to a judge to decide. That mechanism is in section 266 in New Brunswick and section 149 in Nova Scotia.
In practice a serious injury claim is run by your own lawyer and the property subrogation rides along behind it. Nobody should be settling your injury claim in order to close a repair file.
Direct Compensation Property Damage Carries No Subrogation Right
New Brunswick’s direct compensation provision has your own insurer pay for the damage to your car regardless of who was at fault, and then expressly removes any right of indemnification or subrogation against the other driver for those payments. Nova Scotia and Prince Edward Island operate direct compensation for property damage as well.
The consequence is that no one is chasing the other driver for your bumper. The property side closes on its own terms and the injury claim continues separately, which is set out in the guide to suing after a car accident.
In New Brunswick, a Disability Insurer Gets a Deduction Rather Than Repayment
Where a car accident is involved, New Brunswick does something different with income replacement. Section 265.4 reduces the past income loss recoverable in the action by the income continuation, sick leave and disability insurance payments already received. Subsection (3) then says the payer is not subrogated and the plaintiff is not required to reimburse it.
So in a New Brunswick car accident the disability carrier does not get its money back out of your settlement. The award is smaller instead. That distinction matters when an adjuster tells an injured person they will have to repay a benefit they were paid two years ago.
Group Health and Disability Plans Outside That Rule Keep a Contractual Right
Away from car accidents, and in the other provinces, the position is usually the opposite. Group benefit plans, employer sick pay schemes and private long term disability policies commonly contain their own subrogation or reimbursement clause, and the plan is entitled to be repaid out of a recovery for the same loss.
The clause is in the booklet, not in the statute, and its wording decides whether the plan is repaid in full or shares the shortfall. Those repayments appear as their own line on the settlement statement at the end of the file.
A Release You Sign Can Extinguish a Claim That Is No Longer Yours
Because the insurer owns part of your right of action, a full and final release given to the driver at fault can wipe out the subrogated claim as well. Insurers pursue their insureds for doing exactly that.
The same risk runs the other way. A release drafted by the defence often covers every claim arising out of the accident, including heads of loss nobody has valued yet. Nothing gets signed until the subrogated interests have been identified and dealt with, which is one of the reasons a car accident claim is not something to settle at the roadside.
Subrogation After a Car Accident Does Not Lengthen Your Claim
Clients hear the word and assume a second lawsuit. There is one action. The subrogated interest is pleaded inside it, the money is divided at the end according to the statute and the policy, and the injured person is not asked to fund or to run anyone else’s part of it.
What subrogation does change is who has to be told before a settlement is accepted. If you do not know which of your insurers has paid what, that is the first thing to establish.