What is Subrogation in Personal Injury?
When someone is injured in an accident, such as being hit by a vehicle while on the sidewalk, the path to financial recovery can be overwhelming. Medical bills, lost wages, and emotional distress all pile up quickly.
The victim’s insurance provider may initially cover these expenses, but what happens next? This is where subrogation in personal injury comes into play.
This blog explains what subrogation is, how it works in personal injury claims, and why it matters for victims and their families.
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What is Subrogation in Simple Words?
Subrogation refers to the process where an insurance company seeks to recover the money it paid to its insured from the party responsible for the injury or accident.
When someone is injured, their own insurance provider may cover the costs upfront. However, once the responsible party is identified, the insurer may pursue payment from that party’s provider.
In short, subrogation allows the insurance company to “step into the shoes” of the injured party and claim back what they paid out for the injury. This process ensures that the insurance company isn’t left bearing the financial burden while also keeping the victim’s compensation intact.
Why Would an Insurance Company Choose to Subrogate?
Insurance companies pursue subrogation for several reasons:
- To Recover Costs: Providers aim to recoup the money they paid, ensuring they don’t bear the full financial burden.
- To Hold the Responsible Party Accountable: Subrogation helps hold the person or entity responsible financially accountable. If a driver hits a pedestrian, insurance may pursue that driver’s provider to recover costs.
- To Protect Their Business Interests: By pursuing subrogation, insurance companies ensure that they are not constantly paying out large sums of money for accidents caused by other parties. This helps to maintain lower premiums and manage overall financial risk.
How Does Subrogation Impact Your Personal Injury Claim?
After an accident, you may rely on your own insurance to cover immediate expenses like medical treatment or car repairs. However, if the accident was caused by someone else’s negligence, your insurance company will likely seek to recover those costs from the at-fault party’s insurer.
Here’s what to know about subrogation in the context of personal injury:
Your Settlement Might Be Affected
If your insurance company subrogates, they will recover the costs they paid on your behalf. But this may affect the final settlement you receive. In many cases, you might need to pay back part of your settlement to your insurer after the case is closed.
Subrogation Rights and Waivers
Some insurance policies allow for waivers or limits on subrogation. This means that, under certain circumstances, the insurer may agree not to pursue subrogation. However, this depends on the specifics of your policy and the nature of the case.
Potential Complications in Settlement
While subrogation helps insurance companies recover costs, it can sometimes complicate the settlement process for accident victims. The amount of compensation the insurer is entitled to can affect how much the victim receives after the case is resolved.
What Are Examples of Subrogation Claims in Accident Cases?
Subrogation claims can occur in a variety of personal injury situations. Below are a few common examples:
- Car Accident Cases: If you’re hit by a driver who is at fault, your insurance company may pay for medical treatment, vehicle repair, or replacement. Afterward, your insurer may file a subrogation claim with the at-fault driver’s insurance to recover those costs.
- Medical Malpractice Cases: In cases where a victim suffers harm due to a healthcare provider’s negligence, the patient’s health insurance might cover the medical expenses. Later, the health insurer may seek to recover these costs through subrogation from the responsible party.
- Slip and Fall Accidents: If you trip and fall on someone else’s property and their insurance covers your medical bills and other expenses, their insurer may initiate subrogation to reclaim those costs from the property owner or their liability insurance.
- Product Liability: If a faulty product causes harm, and your insurance covers the treatment for your injuries, your insurer may pursue the manufacturer or distributor of the defective product to recover the costs.
How Does Subrogation Affect Your Compensation?
While subrogation is important to the insurance provider, it’s equally important for the accident victim to understand how it affects their settlement. When the case is finally resolved, the at-fault party’s insurer may provide a settlement.
However, if your insurer paid for your medical costs or other losses, they will likely have a right to part of that settlement. This is one of the main reasons why settlements can vary — some of the compensation might go to the insurance company as part of the subrogation process.
What Happens if You Don’t Pay Back the Subrogation Amount?
If the settlement is awarded and you don’t pay back your insurer for the subrogation claim, it could result in legal consequences.
Insurers have the right to take action to recover the money they are owed, which could involve pursuing a lawsuit against you. In some cases, failure to settle subrogation claims in accident cases could also affect your insurance premiums or your ability to get future insurance coverage.
How Can RTM Law Help You?
You need expert legal guidance by your side when dealing with subrogation in personal injury cases.
At RTM Law, APC, we understand the intricacies of California accident law and the impact that subrogation can have on your case. Our attorneys will ensure that you receive the full compensation you are entitled to, including addressing any claims that may arise.
If you’ve been injured in an accident, don’t wait — reach out to RTM Law, APC for a free consultation. We’re here to ensure that your rights are protected. Call us today.
Do you need compassionate support and effective representation?
No fees until we win. Available 24/7.
