Why do Insurance Companies Seek Subrogation?
Insurance companies see subrogation as a source of revenue. This revenue has become a necessity in recent years because premiums have been lowered because of market pressure. You should understand the basics of subrogation because subrogation clauses are common in most car insurance policies.
What is Subrogation?
Subrogation is the process through which the responsible party reimburses an insurance for expenses the company paid on behalf of its insured.
Subrogation is best illustrated through an example. Imagine that an individual has an insurance policy with company A. The policyholder is involved in a car accident that was not her fault. She calls company A to file a claim. Company A pays for all of the policy holders medical bills.
Company A will likely seek reimbursement for payment of the medical bills from the party that caused the accident. When company A seeks reimbursement they are seeking subrogation.
Subrogation is basically substitution. A party who was not legally responsible for a debt or insurance claim seeks to shift responsibility for the debt or insurance claim to the responsible party.
After an auto accident, an insurance company who paid a claim will seek reimbursement from the responsible party. Insurance companies can seek reimbursement for anything that the company paid out. This includes property damage, pain and suffering, and loss of consortium. The responsible party could be another driver, or the other driver’s insurance company.
How does Subrogation Work in a Personal injury case?
If your insurance company paid your claim and you did not cause the accident the company can “step into your shoes” in order to recover from the party that negligently caused an accident.
What is a Subrogation Release?
A subrogation release is an agreement that insured individuals sign when they obtain auto insurance. The agreement assigns the insured’s right to recover against the party responsible for your loss to the insurance company. Some contractual agreements require you to waive your right of subrogation.
If you are asked to do so you should first check to see if your policy allows waiver. If the policy does not allow waiver you will not be able to legally waive your right of subrogation.
After an auto accident claim has been made you will likely receive paperwork in the mail. This will explain how must money the insurance company has paid out and whether subrogation will be involved in the process.
What Happens to my Deductible?
If the insurance company recovers from a third party for all of the damage, you will likely get your deductible back.
What Should I do if Subrogation is involved in my Personal Injury Case?
If your insurance company is making a claim of subrogation you should speak to a personal injury attorney.
An attorney at Hutchison & Stoy, PLLC may be able to get a subrogation claim waived or the amount reduced. Some types of policies, namely self-funded ERISA policies do not require the insurer to reduce its claim, but we believe it never hurts to be nice to the subrogation adjuster and request.
In addition, the Warriors For Justice are aware of multiple state laws that require reduction of subrogation inserts. Contact a Fort Worth Personal Injury Lawyer at Hutchison & Stoy, PLLC today for a free case evaluation. Fill it out online or call us today at (817) 820-0100.