Subrogation is a term often heard in injury cases. According to Merriam-Webster, the definition of subrogation is “specifically : the assumption by a third party (such as a second creditor or an insurance company) of another’s legal right to collect a debt or damages.”
In injury cases, it means that an insurance company gets to step into your shoes and recover costs from the at fault party.
Huh?
Maybe it is easier to understand subrogation in examples.
Let’s say you are injured by negligence in an auto collision, and your car insurance pays for the repair of your car, and your health insurance pays for your medical treatment. When you eventually get a payment from the at fault driver’s insurance, you have to pay back your car insurance for the repairs, and your health insurance for your treatment. That is how subrogation works.
Another example could occur if you are injured at work because of a faulty piece of equipment. You may have a claim against your employer’s workers’ compensation insurance and also the manufacturer of the faulty equipment. Workers’ compensation will pay your medical bills as the law requires, and if you receive a judgment from the manufacturer, the workers’ compensation carrier will want to be repaid for money expended on your case.
Subrogation is important because:
- The injured party receives swift treatment and/or compensation.
- The at-fault party can’t avoid financial responsibility.
- It helps insurance companies control premiums by recovering costs.
- It also means you don’t get paid twice (once by your insurer and once by the at-fault party).
Exactly what is paid back to the insurance company can vary from state to state. Nebraska in particular has unusual and complicated laws when it comes to repayment. Generally the repair and injury costs are repaid without question. But what about the insurance company’s time spent in administering and perhaps litigating the claim and subrogation?
Luckily the injured party does not have to be involved in the negotiations for repayment. That is handled by the insurance companies. If you have an attorney for your injury claim, they will look out for your interests in the subrogation process.
Subrogation is one more reason why it is a good idea to have an attorney for your injury claim.
