If you have suffered an injury and received payments from your insurance provider, they may be able to collect money for your settlement from the party that caused your injury.
This is possible due to a clause in your insurance contract called subrogation right. This allows a third party, usually a health, disability, or automobile insurance company, to recover money it has paid from the party responsible for the injury.
Subrogation Basics
Subrogation is the legal right of a third party to collect a debt or damages on behalf of the insured person. Generally, insurance companies use it in insurance claims involving personal injury. These claims involve the following parties: the insured person, the insurance company, and the party responsible for damages.
For example, say you suffer an injury in a car accident due to someone else’s negligence. If your health insurance covers your medical bills, subrogation allows them to sue the person responsible for your accident. As a result, they may recover some of the money they used to pay for your injury.
Is this legal?
It is. Nearly all insurance policies include a subrogate clause. You accept this clause when applying for insurance. The process helps an insurance company and those involved in the case to make a legal, mutual decision.
It is common for insurance companies to sue third parties that may have caused the insurance company’s loss. Subrogation forces the person who caused the incident to cover the damages rather than the injured party.
Subrogation also ensures that the injured party cannot claim recovery benefits twice: once from the insurance company and a second by suing the wrongdoer in court.
Can I get insurance without a subrogation clause?
Yes, an insurance company may allow a waiver of subrogation. This waiver removes the right of the insurance company to go after the party responsible for the loss or damage.
The waiver will also leave the insured with a much higher insurance premium rate.
What are my options if I am not fully compensated for losses?
Alabama courts have allowed attorneys to negotiate reduced repayment amounts. For instance, the “made whole” and “common fund” doctrines are two options available.
The made whole doctrine states that insurers can only pursue subrogation rights if they have fully compensated the injured party for all their losses.
Common fund doctrine requires an insurance company to pay its fair share of the attorney’s fees and costs to obtain money from the responsible party.
Subrogation can negatively impact injured parties if they do not receive enough compensation to cover immediate and long-term expenses.
Hiring an experienced attorney who knows all about personal injury law and subrogation rights is vital to receiving a settlement or trial judgment that will benefit you financially.
If you are facing subrogation claims, you will need an attorney who works on your behalf to resolve those claims and minimize the repayment to insurance companies. Contact the experienced attorneys at Siniard, Timberlake & League. We can help.