If you’ve recently been involved in an Orange County car accident, you may have heard the term “subrogation” thrown around by your insurance company. Unless you’re well-versed in insurance law and practices, you’re probably unfamiliar with the phrase and what it means for you.
In most cases, subrogation will have little impact on you after an accident. However, there is a chance that it could help you recover some of your out-of-pocket expenses. Personal injury attorney John Rapillo explains.
What is Subrogation?
Subrogation is a legal process that basically allows your insurance company to recover compensation on your behalf. California law allows insurers to be “made whole” after paying insurance benefits to an injured policyholder.
The easiest way to understand subrogation is by understanding how it might apply to you.
Here’s an example:
Last week, you were sitting at a red light at an intersection in Orange County. The light turned green and you started to drive through the crossroads. Unfortunately, at that same time, another driver was attempting to beat the red light and sped through the intersection. Your cars collided and you suffered $50,000 in damages (e.g., medical bills, property damage).
The other driver denies running the red light and claims that he is not to blame for the accident or your injuries. You don’t have time to wait around to litigate the claim and need money immediately, so you file a claim with your own insurance company.
Your company reviews the accident, determines the other driver is at fault, and cuts you a check for $45,000. You have a $5,000 deductible that you’re required to pay. Together, you’re able to put together the $50,000 you need to cover your expenses.
Your insurance company is not happy that it paid $45,000 out-of-pocket for an accident that was not your fault. Subrogation allows your insurer to file a claim against the other driver and their insurance company to recoup their costs as well as the cost of your deductible.
Your insurer files a subrogation claim to recover the entire $50,000 in damages that you suffered in the accident. When the other insurer pays, your insurer will reimburse you the $5,000 deductible you paid out-of-pocket.
Does My Insurance Company Have to Tell Me About Subrogation?
Yes. While your insurance company is not required to subrogate a claim, it certainly has the right to do so. If it is clear that the other party is at-fault, your company will not hesitate to recover the money it paid for your accident.
However, you must be notified of any subrogation claims. Why? Subrogation is essentially your insurer stepping into your shoes to recover money that would have been paid to you if you had pursued the claim on your own. Since you are technically the person to whom the money is owed, your insurer has to let you know they’re taking the matter into their own hands.
Your company also has to let you know about subrogation because you’re entitled to recover your deductible. If the company wants to try to get their own money back, they are also obligated to recover your deductible.
What If I Am Partially Responsible For My Accident?
In California, anyone who contributes to the cause of an accident (or aggravation of any injuries) can be liable for damages. So, if you are partially responsible for an accident, your financial recovery can be reduced. This does not mean that your claim cannot be subrogated. However, your insurer may only be able to recover a portion of the insurance proceeds it paid to you. If it recovers compensation, it can still reimburse you for part of your deductible.
Here’s an example.
Let’s say it’s determined that you were 30 percent to blame for that Orange County intersection accident because you were texting at the time of the crash. When your insurance company subrogates the claim, they will still seek to recover some of your deductible. However, you’ll only be repaid 70 percent of the $5,000 you paid. (Payment reduced by your 30 percent fault).
What If the At-Fault Driver Isn’t Insured?
In typical subrogation claims, your insurance company will file a claim against the at-fault driver’s insurer to recover compensation. If the at-fault driver is uninsured, your insurance company can file a claim directly against the at-fault driver.
Orange County Car Accident Attorneys
Have you been injured in an Orange County car accident? Call the Law Offices of John Rapillo for help. Our Orange County personal injury attorneys can review your case and help you determine the best legal strategy to recover compensation. Contact us today to schedule a free case evaluation.
Law Offices of John Rapillo