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What Is Subrogation?

Posted on 02/08/23

Victims of accidents typically have to go through various processes of recovering compensation from at-fault parties. This can include filing an insurance claim or even filing a civil personal injury lawsuit against another party. Recovering compensation for medical bills and other expenses can take months or even years. This opens the door to the insurance carriers using a process called subrogation if the insurance carrier pays you compensation before a settlement with another party is reached. 

What is Subrogation?

When looking at subrogation from the insurance carrier apostrophe standpoint, we can see how this would be an important aspect of a claim. It is also essential to look at it through the insurance carrier’s lens, so you know why this occurs in the first place.

Defined, subrogation is the legal right of one party to make a payment that another party owes and then to collect the money from the party that originally owed the money sometime after the fact. We understand that that sentence may be a little bit confusing, so we want to break this down into some common steps that occur after an incident (keep in mind that this will be a car accident example, but subrogation works and other situations as well):

  1. You are a loved one get into an accident and file a claim with your insurance company.
  2. Your insurance company pays you a settlement check to cover your losses, such as medical bills, lost wages, and property damage expenses.
  3. An investigation discovers that the vehicle accident was caused by a defective part of your vehicle, and the auto manufacturer is the actual at-fault party.
  4. Your insurance company will use subrogation to seek reimbursement from the actual at-fault party for the at-fault party’s insurance company.
  5. The auto manufacturer or their insurer pays your insurance company what they paid you.

Under subrogation laws, the individuals initially affected by the incident may also receive additional compensation back. This would occur if the individual harmed paid deductibles or other fees to the insurance carrier while settling the claim. The insurance company is required to let individuals know if they are attempting subrogation against another party, and they are responsible for recovering any costs the claimant paid and then paying them to the claimant.

Do You Need an Attorney?

Claimants generally have no role in an insurance company’s attempt at subrogation against another party. In fact, most insurance policies require that claimants cooperate with subrogation attempts. This means that the individual claimant will likely not be able to sign any waivers releasing other parties from liability.

If there are any allegations of shared fault that come up during the process of subrogation, you may need to reach out to a personal injury attorney to help with your claim. Shared fault can lower the amount of compensation you receive, but an attorney can conduct an investigation into the incident and help individuals through this process. If you have any questions about your insurance claim or the subrogation process, you can reach out to an attorney for a free consultation of your claim. It is important to understand that insurance companies work to pay as little money as possible for a claim, and this is not always in the best interests of the claimant.