What is a Subrogation Action in Insurance Law?
Subrogation, to put it simply, is a legal term that refers to allowing one party (such as an insurer) to make a payment that is actually owed by another party (another person’s insurer) and collect money from the party that owes the debt after the fact. If you were injured in a car accident and visited the emergency room for treatment, you may have submitted a bill to your health insurer for payment purposes. In many cases, your health insurer will then cover the costs of treating your injuries; however, your insurer may contact you to discuss how your injuries actually occurred. The reason why the insurer often times does this is to determine if somebody other than the person with sustained injuries could be liable for the injuries. They also call sometimes to determine if you are planning on suing the other driver for said injuries.
When does subrogation happen?
Typically, subrogation will be one of the last steps in an insurance claims process. Most of the time, the insured person will hear nothing about it because insurance companies are taking matters into their own hands to help the injured party as much as possible. However, if the insurance company does decide to pursue the process, the law in all states requires that they must inform you that it is happening. This is because, if the insurance company decides to pursue, they must try to recover the cost of your deductible as part of the process and refund directly to you if they do happen to recover it. Another reason they must tell you is because your insurance policy will require you to cooperate with any attempts by the insurer to pursue subrogation action. This means that you won’t be able to sign any waivers or agreements releasing the other driver from responsibility if they are judged to be at fault for your accident.
What is partial fault?
In some accidents, you may be found that you were partially at fault for your accident. The amount of the deductible that you can then recover will be prorated to the percentage of your fault. This means, if you were found 40% at fault for the accident, and your claim is subrogated by your insurer, you will be entitled a 60% refund.
It is also very important to be aware of a waiver of subrogation. This is something that could be written in the fine print with the other driver’s insurance company, so this is why special precautions need to be taken at all times during this process. Some insurers will attempt to insert this waiver into a settlement, which would prevent your insurance company from attempting to get reimbursement for money that is paid out to you. This could then cause your auto insurance company to refuse your claim because they will not be able to seek the proper reimbursement from the other driver’s insurance company.
These are all things to be mindful of if you are injured in an accident if subrogation occurs. Because of all the legalities involved, it is important to work with an attorney who has the experience to deal with all complications that may arise. You can contact MDL today to get a free consultation about your possible claim.