If you’re hurt in an accident you may need medical care for a long time before receiving compensation from the individual who caused it. Your insurance policy will most likely cover this treatment out of their own funds – before it can be recovered from the at-fault party.
Subrogation is a legal phrase that refers to the insurance company’s ability to reclaim the money it paid for your accident as well as collecting from the party that caused it. The subrogation payment will come from the compensatory damages of the other party’s insurance company, which will be awarded in your personal injury case.
Insurance companies are unconcerned with fairness and justice – those are important to the individual, not necessarily the organization. Their goal is to get back the money spent on a claim and to limit exposure to paying out on claims for which they and their clients are not liable.
When it comes to subrogation,
Fault is key
Subrogation allows your insurance company to refund some of the costs (medical payments, repairs, etc.), as well as your deductible, from the driver responsible for the accident.
You might decide to file a claim with your insurer, pay your deductible, and let your insurer take care of the rest. Since you’re not entirely at fault in this situation, your insurance company could choose to subrogate the other party’s insurer to recover all (or some) of the accident costs. You might get all (or some) of your deductible back if that happens.
What is a Waiver of Subrogation?
A Waiver of Subrogation is an endorsement that prohibits an insurance carrier from recovering the money they paid on a claim from a negligent third party. The Insurance company waives their right to subrogation in exchange for you not filing a lawsuit against them. By signing this waiver, you are stating that the insurance company is fully liable for all damages related to your claim. You cannot collect anything from any other source or party, including your own health insurance company if applicable.
There are five main reasons why an insurance company would ask you to sign this waiver of subrogation.
- First, is if the responsible party’s insurance company is financially unable to pay for the claim themselves, which can happen if their risk pool has become very risky or if there have been several claims recently.
- Second, an insurance company may ask you to sign a waiver of subrogation if they are part of another larger risk pool.
- Third, in some cases an insurance carrier may believe that the accident is not its responsibility. This would be the case when you’re hit by an uninsured driver.
- Fourth, Insurance companies are supposed to deal with all accident claims in good faith, but there are some that can’t wait to get rid of the claim and the injured person. They are attempting to minimize the number of active or outstanding claims to reduce their risk profile.
- Fifth, the final reason is if the at-fault driver was drunk or otherwise at fault in the accident, their insurance company want to try and avoid paying anything out. In this case, you’d be smart to get an attorney involved who can protect your interests if you’re signing a waiver of subrogation.
In most states, if the insurance company asks you to sign a waiver of subrogation they are required to give you written notice that by signing this document, you are waiving your right to pursue any further compensation from the other party or its insurer. It is important to note that if you sign a waiver of subrogation, you cannot recoup anything from the third party in a lawsuit.
Key Takeaways About Subrogation
- The legal right of one party to recover money or debt owed to another entity by a third party is known as subrogation.
- Car insurance subrogation allows the at-fault driver’s insurance company to compensate the other driver’s insurance company for any claims they paid.
- Subrogation helps insurance firms pay claims promptly by keeping premium rates low for good drivers and assisting with reimbursements.
- A subrogation waiver is a promise not to seek compensation from the liable party. Before signing one, drivers should always check with their insurance company as well as an attorney.
Working with an experienced auto accident attorney
If you or a loved one were injured in an auto accident and are unsure of how to handle insurance companies, you have the right to legal assistance to expertly guide you through the process.
Make an appointment with our Inland Empire personal injury attorneys at Harsh Law to talk about your case.