Personal Injury Pitfalls: understanding subrogation.
Subrogation. Few outside of the legal or insurance profession could probably define the term. That said, few inside the legal profession can define the term in such a way as to make the average person understand what it is, and how it works. Put bluntly, subrogation is the ability of your insurance company to try to recuperate what they paid for your medical care when you were injured should you settle with the party that injured you. To restate “subrogation means YOUR OWN insurance company gets reimbursed right off the top of your personal injury settlement-before you even see one dollar.”
This hardly seems fair. Most people would say that they pay the insurer monthly premiums to bear the risk of the potential injury, and that paying for care is the cost of that risk. While that seems logical, that isn't exactly how things work. Many states have codified the ability of insurance companies to be reimbursed for their costs to cover medical treatment. This site has a comparison of the ways the different states handle subrogation rights, and it’s an interesting read.
Further, there are always two sides to every story. Jeffrey M. Baill’s Confessions of an Insurance Subrogation Attorney explains that “[t]he genesis of the [subrogation] doctrine is without it, an insured could double recover – once from the tortfeasor and once from the insured’s own insurance carrier. In order to prevent such a windfall, the courts granted the insurance carrier a right of reimbursement.” He goes on to explain that an insurance company’s losses causes premiums to rise, across the board. As such “[a] recovery [through subrogation] would have the effect of lowering rates.” At least to Mr. Baill, subrogation is a net positive for anyone paying an insurance premium.
Whether or not you agree with the fairness of subrogation rights, it is imperative that you understand the impact on those rights on any settlement claim that involves an insurance company. As always, the best advice is to arm yourself with knowledge, and a great attorney.
— Derek A. Jordan, Esq., Barnes Law
Derek A. Jordan is an associate attorney with Barnes Law, licensed to practice law in Tennessee.
The opinions expressed are those of the author and do not necessarily reflect the views of the firm, its clients, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
 This is for information purposes only, and the author cannot validate the veracity of the data presented. Contact a local attorney regarding the laws affecting your claim.