Subrogation is one of the most important elements of many insurance settlements, yet individuals dealing with an auto accident are often caught off-guard by its existence and the way it affects the total sum received. As such, it’s critical that you develop at least a basic understanding of the concept of subrogation — this will help ensure you have realistic expectations for your accident settlement and will understand why exactly it’s paid out in the way that it is.
Subrogation, in one sentence, works like this: When your insurance company gives you money to cover damages caused by a third party, you forfeit that amount back to the insurance company in the event of a settlement. In other words, your insurance company has privilege over the money you receive in a settlement, up to the amount that is paid out to you. Almost every insurance policy establishes subrogation as a right of the policy creator. Discuss with an experienced car accident attorney to verify whether subrogation is a factor in your case.
For example, say you’re rear-ended at a red light. If you have health insurance, it may fully or partially cover the initial costs of the ambulance and emergency room visit (call it $1,000). If you’re injured while you’re on the job, your employer’s workers’ compensation policy may cover these bills. Regardless of who pays, when you take the at-fault party to court and are awarded damages related to the accident, that insurance company has a right to $1,000 of the judgment. This is subrogation in action.
Note that subrogation does not apply in all cases, and that there are situations in which an insurer might forfeit its right to subrogation. Because the issue can be quite complicated, it is vital to work with a Los Angeles car accident lawyer to ensure your rights are being protected.