In most cases, a health insurance company will cover the medical costs of an accidental injury. Following payment, the insurer may want to speak with you to discuss the nature of the injury and how it occurred, often in an attempt to determine who, if anyone, is to blame either in part or in full for the injuries.
The insurer may also try to find out if you plan on filing a claim against a third party for your injuries, as the insurer could experience a level of financial relief if another party is responsible for covering the damages. In the process, subrogation is likely to come up.
What Is Subrogation?
Subrogation involves replacing an individual or group in a legal setting with the insurer during legal proceedings. In cases involving insurance companies, insurers stand in the shoes of their insured and attempt to recover damages from another person or organization through subrogation.
Subrogation starts with the insurance company’s attempt to cover losses associated with a claim. Once the insurer pays the injured party, the insurance company will determine whether it should pursue the third party deemed responsible for the injury. In the process, the insurer will file a claim against the party responsible.
Insurance policies often include sections that detail when an insurer can use subrogation to pursue a third party under certain circumstances.
Collateral Source & the Insurance Company’s Role
A “collateral source” involved in subrogation is a private entity such as an insurance company or government agency that covers payments associated with a personal injury claim. Issues around subrogation bring to question which part of a verdict or settlement will go toward the collateral source to repay them for any payments they made to the injury victim. In the process, the injured party will only recover compensation for the damages sustained, without the ability to profit from the damages.
Types of Subrogation
There are three main types of subrogation:
- Equitable Subrogation – essentially the right for the paying party to recover from the non-paying party involved in a claim. Insurance companies can represent injured parties to recover the equitable amount owed for damages that the insurance company paid. The party responsible for paying the obligation is known as the “subrogee,” while the recipient of the payment in the claim is the “subrogor.”
- Conventional Subrogation – also known as contractual subrogation, involves the specific relationship between the insured, insurer, and the third party. Similar to other types of subrogation, conventional subrogation also enables insurance companies to stand in the policyholder’s shoes to file a claim after the company grants the insured party a claim. Subsequently, the insured party forfeits the right to file a claim against the third party, and the insurance company will only pursue repayment for the amount it covered.
- Statutory Subrogation – doesn’t involve any premiums that an insured party would pay to an insurance company, and it enables a party or multiple parties to engage in subrogation. For instance, a work injury may take place, in which case the injured worker may receive payment from the employer to cover medical treatments and lost wages. In turn, the worker can’t sue the employer if the employer covers costs without issue. Unlike the other types of subrogation, the insurance company doesn’t file a claim or step into the insured party’s shoes.
Subrogation Rights & Waivers of Subrogation
Waivers of subrogation are contracts in insurance policies that waive the rights of the insurer to pursue legal action against the party responsible for any damages. Ordinarily, a right to subrogation permits insurance carriers to take the place of the insurance holder after payment and recover damages from the party responsible. However, depending on the language of the waiver, it may foreclose on all subrogation rights.
Little Rock Subrogation Attorneys
In the event of subrogation, it is best to have an experienced attorney by your side. The subrogation lawyers at Destiny Law in Little Rock can provide you with the support you deserve and help guide you through the entire process!Schedule Your Free Consultation