Subrogation is important because it prevents you and your insurance company from paying for damages or financial losses for which you are not responsible.
When an accident victim goes to the hospital after an accident or has their car repaired, they tend to first pay for their services with their own health or car insurance. When the victim goes to the hospital, he will be billed for the services rendered according to the tariff agreed between the hospital and his insurance company. The health insurance company can recover the payment of the bodily injuries of the victim if his indemnity exceeds the sum of his economic and non-economic damages. The goal of your personal injury lawyer is therefore to help you retain as much of your accident claim settlement as possible. Click here to learn more about how a personal injury attorney can break down the concept of subrogation and give you a free estimate of the value of your case.
What are damages?
damage are the losses sustained by an injured victim after an accident. Although they vary a bit from case to case, they are generally divided into two types: economic damage and non-economic damage. Economic damage is your financial loss, such as damage to your car or expenses incurred for services at a hospital, doctor’s office, pharmacy or physiotherapy clinic. Initially, these economic damages can be paid for by your car or health insurance.
Non-economic damage compensates you for your pain and suffering. If you saw a psychologist or therapist for your anxiety or anguish after your accident, you may have been able to pay for them with your health insurance or through another benefit program. This is a good step to help you heal your whole being after your accident. Ultimately, however, the liable party should pay your damages, not your insurers.
Why is subrogation important?
Subrogation is a legal right that insurance companies must recover from a third-party carrier that has caused a loss to the insured. If you’re involved in an accident and aren’t at fault, the at-fault driver’s auto insurance (known as a Third-Party Carrier or TPC) must pay for your damages. If they take a while to do it and your bills are piling up or the body shop won’t do the job until the bill is paid, your insurance steps in and pays in the meantime.
Subrogation is important because it prevents you and your insurance company from paying for damages or financial losses for which you are not responsible. It’s also important because you don’t have weeks or months to settle your claim, so your insurance company covers your expenses in the meantime. Subrogation helps keep your insurance premiums low.
What is an example of subrogation?
Andrea and Sally were involved in a car accident, which resulted in Sally’s car being badly damaged and requiring repairs. When Sally took her car to the body shop, she learned that the repairs would cost her $4,000, but she has insurance, so they will cover the full cost of her repairs. However, after Sally’s insurance paid in full for her repairs, it was discovered that Andrea had broken the law and caused the accident. Sally’s insurance company will therefore use the doctrine of subrogation to recover its losses from Andrea. Sally’s insurer is suing Andrea to recover the costs paid to repair the car.