Have you had an accidental injury, gone (or had to be taken) to the emergency room for treatment, then submitted your medical bills to your health insurer for payment? If your answer is yes, then we presume that inasmuch as the insurance company paid the bills, they also called you to learn more about how the injuries occurred. In other cases, the questions will come in before they make the payment.
As annoying as this is, you need to bear in mind that your insurer is only doing what is expected and they are only complying with your insurance policy to determine if someone else, other than you or the policyholder, is partially or responsible for the injuries leading to the insurance claim. In other cases, your insurer may pry further to determine whether you are planning to use a subrogation law firm to sue the party responsible for the injury or not.
Why?
Well, insurance companies always go through all this trouble to determine if a third party is responsible for the injuries or not. If a third-party is the guilty party, then your insurer will be relieved of some of the financial responsibility.
Such scenarios are the embodiment of the concept and the general reasoning behind subrogation in insurance.
Subrogation, in simple terms, means that one party or person stands in on behalf of someone else. Subrogation is an important term in the insurance world as it issues surface when someone has been injured, and the party at fault pays for the damages from the injury.
Subrogation Rights and Responsibilities
A subrogation claim is the bit of insurance that allows an innocent paying party or the collateral source to put themselves in the shoes of the injured person/ party. Note that the collateral source refers to the private entity, often a private insurer, or even the government agency that makes the payment to the party with the personal injury claim.
The collateral source asserting the subrogation claim won’t be entitled to any greater legal rights than the rights of the person who was entitled to receive the benefits initially.
Subrogation Issues and Equitable Subrogation
There are different subrogation issues that could arise, but according to Keis George LLP the most common issues of subrogation involve questioning the part of the jury verdict or the settlement to be used in repaying the collateral source for the payments owed to the injured party.
The reason why this is an issue is that the subrogation should be done in a manner that prevents double recovery for the injured party. According to the subrogation laws, the injured party should be able to recover from the actual damages suffered, but they shouldn’t be able to profit from that loss. An injury that leads to payment of $10,000, for example, should not lead to the payment of $20,000 to the injured party by the party that caused the injury.
Subrogation also lowers the insurance rates thanks to equitable subrogation, the legal doctrine which allows the party that’s made payments for the other party to make their claim towards the damages recovery or even the funds from the third party.
Indemnity
Indemnity, on the other hand, refers to the comprehensive form of compensation by insurance for the damage or even the losses, legally called liability for the said damages.
Indemnity is regarded as the contractual agreement between two parties, where one party agrees to pay for specific potential damages/ losses caused by another party.
