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.

If you want to learn more about the legal processes surrounding your claim, including concepts like subrogation, please reach out to Knowles Law Firm. We’re happy to keep our clients well-informed, and we’ll help explain complex concepts to keep you confident in the outcome of your claim. We have an extensive track record of bringing clients the outstanding results and compensation they deserve, and we can do the same for you as well. Our team looks forward to hearing from you and making this difficult time easier to manage.

Definition and Purpose of Subrogation

Subrogation is a legal concept that allows an insurance company to recover the costs associated with a claim from the party responsible for the loss. Essentially, it means that if you—as a policyholder—receive compensation from your insurance company for damages or injuries, then the insurer has the right to step into your shoes and seek reimbursement from the at-fault party.

The primary purpose of subrogation is to ensure that the at-fault party is held accountable for the damages they caused. This process helps prevent the insurance company from bearing the full cost of the claim, which in turn can help keep insurance premiums lower for all policyholders.

Does Subrogation Help Policyholders?

Subrogation is an essential process in the insurance industry, as it enables insurance companies to recover costs from the at-fault party and reduce the financial burden on the insured. When an insurance company pays out a claim, it essentially takes on the financial responsibility for the damages.

Through the subrogation process, the insurance company can then pursue a claim against the at-fault party’s insurance company to recover these costs. This helps the insurance company recoup its expenses and ensures that the fault party is held responsible for their actions. For policyholders, this means that they can receive timely compensation for their losses without having to wait for the at-fault party to pay up.

The Subrogation Process

The subrogation process involves several key steps that allow the insurance company to recover the costs associated with a claim from the at-fault party. Here’s how it typically works:

1. Claim Payment: After an accident or loss, you file a claim with your insurance company. If your claim is approved, the insurance company pays out the benefits to cover your damages, such as medical bills, property damage, or other expenses.
2. Investigation: The insurance company conducts an investigation to determine who is at fault for the accident. This may involve gathering evidence, speaking with witnesses, and reviewing police reports.
3. Subrogation Notice: Once the at-fault party is identified, your insurance company will notify the at-fault party’s insurance company of its intent to pursue subrogation. This notice serves as a formal declaration that your insurer is seeking reimbursement for the claim it paid out.
4. Recovery Efforts: The insurance company then works to recover the costs from the at-fault party’s insurance company. This may involve negotiations, legal action, or other methods to ensure the responsible party pays for the damages.
5. Reimbursement: If the subrogation efforts are successful, the at-fault party’s insurance company reimburses your insurer for the amount it paid out on your claim. This helps your insurance company recover its costs and maintain lower premiums for policyholders.

By understanding the subrogation process, you can better appreciate how insurance companies work to protect their financial interests while ensuring that the at-fault party is held accountable for their actions.

When Is Subrogation Appropriate for an Insurance Company?

Subrogation occurs most often in cases where the injured party receives a check from his or her insurance company right away after a car 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 coverage could be provided 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 for Insurance Carriers

Subrogation enables insurance companies to keep their premiums lower for clients because the insurer pays for the damages initially and then seeks reimbursement. Since insurance carriers 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 going 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 and may involve one party assuming the legal rights of another.

If you need assistance handling your claim, don’t hesitate to contact Knowles Law Firm for support. You can reach us and schedule your consultation by calling (402) 431-9000 or by completing our contact form.