WHAT IS SUBROAGTION AND WHEN IS IT RELEVANT TO MY CASE
At Khalil Law Group, we want to do everything we can to educate the public on the law and how it may or may not be affecting your everyday life. For instance, there are words that you hear all the time and you never really felt the necessity of learning what those words meant because they were not of any consequence to you. Here, we explore one of those words…SUBROGATION.
So what is SUBROGATION? You know what, let’s make it even more simple…What is SUBROGATION as it pertains to INSURANCE? At the risk of getting all encyclopedia Britannica on you, subrogation can be described as a legal right held by most insurance carriers that allows them to pursue a claim against a 3rd party that caused an insurance loss to the insured. Say what? Yeah, we know, it sounds confusing. However, it is pretty simple so let’s explore this idea with an example:
Driver 1 is driving down the freeway when he is suddenly struck from behind by Driver 2. As a result of this car accident, Driver 1 is in need of medical care in the amount of $5,000, which is paid for by her car insurance company. After the police report is released, liability is clear and all the parties agree that Driver 2 was at fault for the accident. A couple of months later, Driver 1 receives a settlement check in the amount of $15,000 from the insurance carrier for Driver 2. In this scenario, the insurance carrier for Driver 1 has the right to SUBROGATE the claim by demanding that the $5,000 they paid in medical fees by reimbursed to them from the settlement amount. In essence the insurance carrier could (and likely will) demand that they be paid $5,000 from the $15,000 settlement amount.
It makes sense, right? After all, why would your insurance company have to come out of pocket for a claim that you were not at fault for and where a monetary settlement was reached within the policy limits of the at-fault parties insurance coverage? Well, the California legislature and the law established subrogation rights in order to address this issue and it is sued to allow the insurance carriers an opportunity to recoup costs from a 3rd party.
Why is this something you need to or should know? Well, quite obviously, the reason that this should be important to you is that if, in fact, you are involved in an accident and you suffer an injury or property damage, SUBROGATION may have a drastic effect on your bottom line. By using the above hypothetical/example, you will note that the $15,000 settlement check will be reduced to $10,000 in the blink of an eye because your insurance company just took $5,000 right off the top.
As everyday consumers, we should all be aware of this legal term and the most likely scenarios wherein it can affect us. While a car accident is a likely source of SUBRIOAGATION coming into play, there are other areas that can lead to subrogation.
If you have questions about SUBROGATION or any other legal term that you want explained, give Khalil Law Group a call and we will do whatever we can to assist you.