Subrogation Recovery Estimator
Estimates the net subrogation recovery an insurer can expect after pursuing a third-party tortfeasor, accounting for comparative fault, legal/investigation costs, and deductible reimbursement obligations.
Total indemnity + expenses paid on the claim
Amount the insured paid out-of-pocket (must be returned first)
Estimated fault % attributable to the third-party tortfeasor (0–100)
Likelihood of actually collecting from the third party (0–100)
Attorney fees, court costs, investigation expenses
Internal overhead as a % of gross recovery (typically 3–10%)
Formulas Used
1. Gross Recoverable Amount
Gross Recoverable = Total Claim Paid × (Liability % ÷ 100)
Reflects only the portion of the loss attributable to the third-party tortfeasor under comparative fault doctrine.
2. Expected Gross Recovery
Expected Gross Recovery = Gross Recoverable × (Recovery Probability ÷ 100)
Discounts the gross amount by the realistic probability of actually collecting from the third party.
3. Deductible Reimbursement to Insured
Deductible Reimbursement = Deductible × (Liability % ÷ 100) × (Recovery Probability ÷ 100)
Under most state laws and the "made whole" doctrine, the insured's deductible must be returned proportionally before the insurer retains any net recovery.
4. Administrative Costs
Admin Costs = Expected Gross Recovery × (Admin Rate % ÷ 100)
5. Net Insurer Recovery
Net Recovery = Expected Gross Recovery − Deductible Reimbursement − Legal Costs − Admin Costs
6. Recovery-to-Paid Ratio
Ratio = (Net Recovery ÷ Total Claim Paid) × 100
Assumptions & References
- Subrogation rights arise under common law and are codified in most states; the insurer steps into the shoes of the insured against the tortfeasor (Travelers Ins. Co. v. Lesher, 187 Cal.App.3d 169).
- The Made Whole Doctrine requires the insured to be fully compensated before the insurer recovers; deductible reimbursement is prorated by liability % and recovery probability.
- Comparative fault (pure or modified) reduces the recoverable amount proportionally per the jurisdiction's negligence rules (Restatement Third of Torts §23).
- Legal costs are treated as a fixed estimate; actual costs vary by jurisdiction, complexity, and whether arbitration (e.g., inter-company arbitration via Arbitration Forums, Inc.) is used.
- Administrative cost rates of 3–10% are typical for insurer subrogation units (Insurance Research Council, Subrogation in Auto Insurance, 2019).
- Recovery probability is a subjective estimate; factors include tortfeasor solvency, insurance coverage limits, evidence strength, and statute of limitations.
- This tool does not account for ERISA liens, Medicare/Medicaid secondary payer rules, or workers' compensation subrogation, which require separate analysis.
- Results are estimates only and do not constitute legal or claims advice.