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Subrogation” sounds like a fancy legal term that you need three years of law school to understand. In reality, it is quite a simple concept.

Since you are likely to run into a subrogation claim sooner or later, you need to understand how they work.


A Case Study in Subrogation

A Case Study in Subrogation

Suppose, for example, that you suffer an injury in a car accident with Joe. You believe Joe is at fault, and you intend to file a third-party claim with Joe’s liability insurance company.

Nevertheless, it will take time for you to reach an out-of-court settlement. If Joe’s liability insurance company refuses to settle, you will have to sue, and you’re not sure you will win.

Meanwhile, you have medical bills to pay. Consequently, you file a claim with your own health insurance company. They agree to pay your $11,000 claim minus your $250 deductible. That sounds great, doesn’t it? If you do manage to settle your claim with Joe’s insurance company, or win against them in court, you could receive a double recovery – $11,000 from each insurance company. It’s a windfall, right?

Wrong, of course. There is no free lunch in life. You are not entitled to a double recovery, and your health insurance company will make sure you don’t get one. They will require you to sign a document that transfers your right to sue Joe’s liability insurance company to them. Once your health insurance company pays your claim, they alone will have the right to sue Joe’s liability insurance company.

Your health insurance company, armed with the right to sue, will contact Joe’s liability insurance company and demand reimbursement for the amount they paid you (or if they have not paid you yet, the amount they owe you) plus your $250 deductible. If and when your health insurance company receives the money, they will reimburse you for all or part of your deductible, depending on the terms of your health insurance policy.

This, in a nutshell, is an example of how subrogation works. You could define it as “the substitution of one party by another with respect to the right to sue over an insurance claim.” In the foregoing case, subrogation involved the substitution of your health insurance company for you with respect to the right to sue Joe’s liability insurance company.

Pitfalls for the Unwary

After you file your claim with your own insurance company, the insurance company will probably send you an information sheet to complete. The purpose of this information sheet is to elicit enough information from you to allow them to determine how likely you are to receive compensation from a third party, such as the at-fault party’s insurance company.

More specifically, your insurance company will elicit information designed to allow them to determine who was at fault for the accident. If a third party was at fault, they will want to know if the third party is insured.

They will also want to know whether you plan to pursue your claim through a settlement or a lawsuit. Your insurance company will be happy if you do; it means that if the subrogation process is successful, they won’t take a loss on your claim. Your insurance company will take the money out of your recovery before you ever see it.

Your Cooperation Obligations

Your insurance policy (your health insurance policy, for example) probably includes a subrogation clause in the fine print that obligates you to refrain from:

  • Settling with the at-fault party’s insurance company without their permission; and
  • Signing any documents that would interfere with your insurance company’s right to seek reimbursement from the at-fault driver’s insurance company

Your insurance company will probably refuse to pay your claim if you violate any of the foregoing conditions.

The Fine Print

After you file a third-party claim with the at-fault party’s liability insurance company, they will hopefully offer to settle, and they may present a settlement agreement for you to sign. Buried deep within this document may be a “waiver of subrogation” clause that prevents your insurance company from seeking reimbursement for the claim it has already paid you.

Signing this agreement will result in legal complications that you simply don’t need. Have your lawyer look over any settlement agreement before you sign it, and explain the implications of any clause you don’t understand. Better yet, have your lawyer draft the settlement agreement themselves.

Don’t Try To Handle This Without a New York City Personal Injury Lawyer

Essentially, subrogation is a simple concept, but the details can complicate an individual claim. Find an experienced New York City personal injury attorney who has handled subrogation issues time and time again. Schedule a free initial consultation to get the process started.

Don’t worry about money. Most personal injury lawyers work on a contingency fee, which means you pay nothing unless you win. With a strong claim, you don’t need a dime in your pocket to hire a lawyer. Contact the Law Offices of Jay S. Knispel Personal Injury Lawyers at (212) 564 2800 for a free consultation to discuss the compensation you can seek for your thoracic injury.


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