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Understanding Subrogation

The word “subrogation” scares a lot of people who are the victims in personal injury cases, and it really shouldn’t. It’s a fancy legal term for making sure people get repaid when they pay for bills that are another party’s responsibility.

Let’s say you get in a car accident where the other driver is at fault and your car is undriveable until it is repaired. Since the other driver is at fault, his/her insurance is required to pay for your car to be fixed. Settling these claims may take months, and you may not be able to go without your car for that long, so you may pay your deductible and have your car fixed through your insurance company. Your insurance company then becomes “subrogated” to your rights for property damage. Your insurance company can make a claim against the at-fault driver to recoup its costs for the repairs. If the driver does not pay, your insurance may sue the driver, and even file a lawsuit in your name, to recover its costs. That’s subrogation.

Likewise, if you are physically injured, you should first use your health insurance to address your medical needs. The person who injured you is responsible for your medical bills, which includes the amount of money you paid in co-pays and your deductible as well as the amount that your health insurance paid to care for you. Both you and your health insurance paid for medical bills that were not either of your responsibilities to pay since neither of you caused your injuries. Under the concept of subrogation, both you and your health insurance company will be repaid for your medical bills when the person who injured you pays for the damage he/she caused.

There is an important reason why you always want to go through your insurance first to pay for your medical expenses and to repair your car if you cannot wait for your claim to be settled. There is always a risk that the accident investigation will show that you caused the accident; and therefore you are responsible for your medical expenses and the cost to repair your car. If that happens and you used another service besides your insurance to pay for it, you will be responsible for the total cost of your medical bills and car repairs. You could be pay thousands of dollars on bills that would have cost you hundreds or less had you used your insurance.

Do not let the word “subrogation” prevent from using your car insurance to pay for your car’s repairs and your health insurance to pay for your medical care. This term only means that these companies get part of your settlement when you get paid because they fronted the costs for things that they were not ultimately obligated to pay.

If you are injured in an accident, please contact the Phoenix personal injury lawyers at the personal injury law firm Oracle Law Group today.

Photo credit: Tracy O from Flickr