What Is a Subrogation Claim?

Generally, the subrogation process is the right of an insurance company to recover the amount it has paid on a claim from the at-fault party. There are many moving parts and intricate processes when dealing with insurance claims. Subrogation is vital to that process, especially in personal injury claims. 

In this article, we will discuss the process and importance of subrogation, the different types of subrogation, and the pros and cons policyholders may face when dealing with subrogation claims.

The Process of Subrogation

Steps Involved in a Subrogation Claim

The subrogation process typically begins when your insurance company pays your claim. The party liable for causing the accident will be contacted by your insurance company to cover or pay any expenses they subrogated for you, whether car repairs, rentals, or even medical expenses.

Your insurance company may cover your losses first; that’s what insurance is for. However, your insurance provider will still send a subrogation claim to the at-fault party’s provider for reimbursement. This process may involve negotiation, settlement discussions, and sometimes even legal action from a Los Angeles personal injury lawyer.

Importance of Subrogation in Insurance

Subrogation plays a crucial role in accounting. It prohibits the injured party from profiting more than what is accounted for. For example, If your medical insurance paid for your medical bills, part of your settlement would be used to pay them back. You would not be able to pocket those damages. It prevents the unjust enrichment of one party at the expense of another and ensures that the financial burden of an accident is covered by those responsible.

Types of Subrogation Claims

Subrogation applies to various types of insurance. Let’s delve into two common examples: health and auto insurance.

Subrogation in Health Insurance

When Subrogation Occurs in Health Insurance

Subrogation is common in health insurance, especially when another party’s negligence causes injuries. For instance, if you’re injured in a car accident and require medical treatment, your health insurer might pay your medical bills first. However, if the other driver is at fault, your insurer could seek reimbursement from the other driver’s auto insurer or the driver themselves.

Subrogation in Auto Insurance

Example of Subrogation in Auto Insurance

Let’s use this case as an example. You’re involved in a car crash caused by another driver. Your auto insurance company pays for your vehicle’s repairs and even lends you a rental car while your car is in the shop. The insurer can then file a subrogation claim against the at-fault driver’s insurance company to recover the rentals and vehicle repairs costs. 

The Role of Subrogation in Insurance Policyholder Rights

Rights of the Policyholder

As a policyholder, you have certain rights during the subrogation process. These include the right to be informed about the progress of the subrogation claim and the right to receive any excess recovery after your insurer has been reimbursed.

How Subrogation Affects Policyholders

Subrogation can have several effects on policyholders. Accident victims can begin the healing process sooner, as your insurer pays your claim first before seeking recovery from the at-fault party. However, you may be required to assist your insurer in the subrogation process, which could involve providing information or participating in legal proceedings.

Pros and Cons of Subrogation

Advantages of Subrogation

Cost Reduction

One of the primary benefits or pros of subrogation is cost reduction. By seeking reimbursement from the at-fault party, insurance companies can keep their cost and loss ratios lower, which helps to control insurance premiums for everyone.

Protection Against Unfair Claims

Subrogation also safeguards against false or exaggerated claims, as the at-fault party’s insurer will review the claim during the subrogation process.

Disadvantages of Subrogation

Possible Delays

On the downside, subrogation claims can sometimes result in delays. Recovering costs from the at-fault party can take time, especially if the case goes to court.

Legal Complications

Subrogation can also lead to legal complications, particularly if the at-fault party disputes their liability or the amount claimed. Also, if your insurance company does not submit a subrogation claim, the burden is now on you to recover all compensatory damages from the at-fault party. 

Let West Coast Trial Lawyers Deal With The Insurance Company

After a car accident, the last thought on your mind should be, “Did I follow up on that subrogation claim?” Your priorities should be having a speedy and full recovery, not negotiating with insurance companies. A skilled personal injury lawyer can help you navigate the claims process better than anyone.

At West Coast Trial Lawyers, we aim to help you win the highest settlement possible and hold the negligent driver accountable. WCTL has expert attorneys ready to help you with your subrogation claim. 

Call us today at 888-888-9285 or fill out our contact form for free. One of our experienced California accident attorneys will be available to answer any questions you may have about your case.