What Is Subrogation?

After suffering an injury in any type of accident and pursuing an insurance claim, you might hear the term subrogation from your provider. It is a relatively simple process, but it can be confusing for you as an insurance policyholder or claimant. It will mean your insurance company has stepped in to take your place during a claim. Subrogation will not happen in every personal injury case. It is your insurance company’s legal right, however, and may apply to your case depending on the circumstances.

Steps of Subrogation

Subrogation is a legal right insurance companies can use to recover the money they spend on a claimant’s damages if the policyholder was not the party responsible for causing the accident. If you accept compensation from your insurance provider – a health, automobile, homeowners or another insurance plan – but did not cause your accident, your insurance company will be able to exercise its legal right to subrogation to seek compensation from the party that did cause your accident.

1. You file a first-party insurance claim with your own provider after an accident.
2. Your insurance company accepts your claim and sends you a benefits check.
3. The insurance company wishes to recover the money it paid you from the at-fault party.
4. Your insurer files a claim against a third party, representing your interests for damages.
5. The party responsible for causing your accident reimburses your insurance provider for the money it spent on your claim.

Your insurance company does not have to accept the losses from paying you benefits if a third party is at fault for causing the accident in question. Your insurer may instead wish to use subrogation to get money back from the at-fault party’s insurance company. Your insurance policy should include a section about subrogation. If you have any questions about subrogation, call your provider for answers after getting into an accident.

When Is Subrogation Appropriate?

Subrogation occurs most often in cases where the injured party receives a check from his or her insurance company right away after an accident – before anyone has determined fault or filed a personal injury lawsuit. If you need compensation immediately to pay for your medical bills and other damages, your insurance company could pay upfront. Your health insurer, for instance, may help you cover the costs of your medical bills. Your insurer may then use subrogation later to recoup the costs of paying out your claim.

Subrogation is common during workers’ compensation claims. As an injured employee, you might file a workers’ compensation claim with the help of an Omaha personal injury lawyer without identifying who or what caused your work injury. You will receive a benefits check from your employer’s workers’ compensation insurer without having to prove fault. The insurance company then has the right to use subrogation to pursue reimbursement from the party that caused your accident, such as a contractor or product manufacturer.

Pros and Cons of Subrogation

Subrogation enables insurance companies to keep their premiums lower for clients. Since insurance companies can often obtain the money they spend on claims back via subrogation, they can pass these savings onto policyholders by reducing premiums. Subrogation can also save an injured party from having to go through the lawsuit process. The insurance company can settle the claim with the client before going to trial against another party, saving the policyholder time, stress and money.

A potential drawback of subrogation is having to repay your insurance company if you take the at-fault party to court and receive a judgment award. If you bring a claim against a third party and receive a financial award, the rules of subrogation state that you must reimburse your insurer if it paid for your damages previously. You cannot benefit twice for the same injury: once through your insurance company and once through the civil justice system. Your insurance company will seek repayment. The rules of subrogation can vary depending on your insurance provider and policy.