Subrogation frequently occurs in personal injury claims. It is a legal right that allows an insurance company that has paid all or part of your claim (medical expenses, for example) to demand reimbursement from the at-fault party or their liability insurance company. The ultimate goals are to make the insurance company whole and to prevent you from unfairly receiving a double recovery.

Generally, the insurance company that will pay you first in the event of a personal injury will be your health insurance company. Your health insurance provider may then enjoy subrogation rights against the at-fault party’s liability insurance carrier.

Explaining Subrogation in Simple Terms

Explaining Subrogation in Simple Terms

Insurance companies love to use legal terms like “subrogation,” but they can be deceptively difficult to understand. To clarify, let’s start with an everyday example to illustrate the general principle behind subrogation.

Suppose you suffer serious injury in a Clearwater car accident. Your medical bills are piling up, and you’re missing work as you recover from your injuries at home. Getting desperate, you file a claim against your health insurance policy to help you with your medical bills. 

Fortunately, your health insurance company honors its obligation to pay your claim. Let’s suppose they pay you $20,000. Great! But that is not the end of the story.

Next Step: You File a Third-Party Insurance Claim Against the At-Fault Party’s Auto Accident Liability Insurance Company

As long as your injuries constitute “serious” injuries under Florida law (or if another exception to the state’s no-fault rules applies), you can proceed directly to file a claim against the defendant’s liability insurance policy for $20,000 – the amount of your medical bills. 

You can also potentially claim additional damages, such as lost earnings or pain and suffering. These amounts could multiply the total value of your claim.

That works out wonderfully, doesn’t it? Now, you can get $40,000 for a $20,000 medical expenses claim – $20,000 from your health insurance policy and another $20,000 from the at-fault driver’s liability insurance policy. All for the exact same treatment!

It couldn’t be that easy, could it? Well, no, it’s not that easy. In actual practice, obtaining a double recovery like this would be almost impossible. 

Instead, it’s almost certain that your health insurance policy document has a binding subrogation clause, a reimbursement clause, or both. So what’s the difference?

  • A subrogation clause gives your health insurance company, not you, the right to sue the at-fault driver’s liability insurance company, at least up to the $20,000 it paid you. In other words, your health insurance company owns your right to sue the at-fault driver’s liability insurance company.
  • A reimbursement clause allows your health insurance company to take the $20,000 after the liability insurance company pays it. Your health insurance company does not have an abstract right to sue for $20,000, but the $20,000 itself. If you have a lawyer, the liability insurance company will probably send your settlement to your lawyer’s escrow account. The extra $20,000 will be deducted from your recovery before you see it.

In actual practice, your insurance company might refer to both of the foregoing arrangements as “subrogation,” even though they are different. Either way, you’re out $20,000, but you can’t complain. 

Your Lawyer’s Contingency Fee

Do keep in mind, however, that it complicates matters if you’re paying your legal fees by contingency fee (typically 33% of the total). And almost every personal injury claimant does indeed pay a contingency fee.

It would be unfair for you to shoulder 100% of your lawyer’s contingency fee when your health insurance company is taking a significant chunk of your compensation. As a result, should pay a portion of the contingency fee that goes to your lawyer. 

Negotiating With Your Health Insurance Company

Believe it or not, you can negotiate the amount of your compensation with your health insurance company. Every dollar you take down is another dollar in your pocket. Your lawyer can help you do this.

Subrogation Is Deceptively Complex

Subrogation sometimes involves complex legal issues that are anything but as simple as they might appear. Solving these subrogation problems requires a nuanced and balanced approach combined with no small amount of legal knowledge. Talk to your lawyer if you’re not sure what’s going on with your claim.

Do You Need a Clearwater Personal Injury Lawyer?

If your injuries are serious enough to allow you to exit Florida’s no-fault system (in a car accident) or if your damages are too high to allow you to file a claim in small claims court, you probably need a personal injury lawyer. 
Fortunately, Clearwater personal injury lawyers almost all work on a contingency fee basis. Because of this, you only pay legal fees if you win compensation. Because losing personal injury lawyers work for free, if a lawyer agrees to represent you, you can be fairly certain they believe they can win. Contact Roman Austin Car Accident and Personal Injury Lawyers to schedule a free consultation. Give us a call at (727) 787-2500.