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Understanding Subrogation Claims on Personal Injury Settlements

Posted in Personal Injury on January 8, 2021

When you go through the processes required to recover financial compensation after an accident, you will encounter many unique terms. If you hear the word subrogation, this means your insurance company is bringing a lawsuit against a third party in pursuit of reimbursement for what it has spent on your bills. The point of subrogation is twofold: to save the insurance company from having to pay for losses it is not liable for and to prevent an injured victim from double recovery.

What Is Subrogation?

The definition of subrogation is to stand in the shoes of another party or act as a substitute. Within personal injury law, subrogation refers to an insurance company standing in the place of another party to pay for a victim’s bills. Subrogation typically applies to either car accident insurance claims or health insurance benefits. In either case, the insurance company that paid the client will seek reimbursement from a third party.

Subrogation during an injury claim ensures that a victim does not recover twice for the same accident. If the insured has already received payment for his or her medical bills from an auto or health insurance company, that party should not also be allowed to recover compensation from a personal injury lawsuit. This would essentially pay the victim twice for the same damages.

Instead, if an insurance company has already paid off a claimant’s debts, it will be the insurance company that has the right to bring a third-party lawsuit for those expenses, not the injured. Since the insurance company paid for losses when its client was not at fault, it may bring a claim to replace what it spent. The insurance company will seek reimbursement through the subrogation process.

How Does Subrogation Work?

After an accident in Texas, you require immediate medical care. If you cannot pay for this care out of pocket, it does not mean you cannot receive treatment. Instead, an insurance company will step in to help you pay the bills, such as your car insurance or health insurance provider.

Once you have received medical care, your insurance company will send you a form requesting additional information about the accident. The purpose of this form is to determine if there is someone else financially responsible for the accident. If so, your insurer will let you know of its intent to pursue a subrogation claim. You legally must cooperate with this type of claim, meaning you cannot waive subrogation.

Your insurance company can seek subrogation directly from the at-fault party, from the at-fault party’s insurance provider, or from a settlement or judgment award you receive from the accident. How the insurer chooses to pursue subrogation will depend on the company and the factors of your case.

Subrogation and Your Personal Injury Settlement

Subrogation is an action available to insurance companies to prevent them from paying for losses it legally is not responsible for paying. If subrogation is successful, it will not only reimburse the insurance company, but it will also reimburse you for any money you spent on insurance deductibles.

Subrogation may not require your direct involvement if your insurance company goes straight to the at-fault party for reimbursement. If the insurance company places a subrogation lien on your settlement or judgment award, however, anticipate an amount of your award going immediately to the insurance company after winning your injury claim.

You will be required to pay off any liens against your settlement or judgment award before you can keep the remaining amount. With a subrogation lien, the amount of money your insurance company spent on your medical bills will be deducted from your final award won. Then, the remaining amount will be divided to pay for legal fees, lost wages, property repairs and other losses.

For more information about a subrogation claim during a personal injury lawsuit in Texas, consult with an attorney.