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What is Subrogation?

The law is full of cumbersome terms and complex principles that can seem intimidating to many people. Yet, these notions are at play in our daily lives, whether we realize it or not. Subrogation is one of those ideas that can be very useful to understand in the context of personal injury.

The word “subrogation” means to stand in the place of another, particularly to substitute for another with regard to a legal right or claim. The most common example is when a vehicle is involved in an accident. Let’s say you are traveling along Ocean Drive when another driver runs a red light and T-bones your car, totaling it. You call your auto insurance company and they pay you for all the expenses you incur due to the accident. The insurance company then contacts the at-fault driver’s insurance carrier and essentially steps into your place to recover any amount of compensation paid out on your behalf. Because your insurance carrier paid your claim of loss caused by someone else’s negligence, it succeeds to your right to sue for damages.

With roots in the 1700s, the doctrine is intended to compel the at-fault party to pay for the harm caused and to prevent an insured from recovering twice – once from the negligent party and then again from the insurance carrier. It would be quite unfair if an insurer paid $20,000 in medical bills for a policyholder’s injuries resulting from an accident and then the injured policyholder was allowed to collect another $20,000 for medical expenses from the at-fault party.

Subrogation is the legal term for allowing a third party to stand in the place of an injured person. Known as a “collateral source,” these third parties are usually insurance companies who pay an injured policyholder’s claim and then gain the right to sue the negligent party who caused the harm.

Allowing insurer subrogation claims is also the most effective way for insureds to recover their deductible. When the property loss stems from a vehicle accident caused by a non-insured driver, subrogation efforts by the injured driver’s insurance company are the best opportunity for recouping the deductible. Of course, Florida law requires that all drivers carry personal injury protection (PIP). However, this “no-fault” coverage is limited to $10,000 and covers only 80% of medical expenses. These benefits are not subject to subrogation and do not have to be reimbursed.

Subrogation issues can present thorny issues that are best sorted out by an attorney. Just the presence of a subrogation interest can alter the way in which a third-party lawsuit can be settled. Conversely, waivers of subrogation can appear in some contractual agreements that prevent insurance companies from pursuing damages against a particular party. Anyone faced with such a waiver should consult an attorney to ensure they aren’t improperly limiting their rights or the amount of damages they can recover.

As one of South Florida's most respected and oldest law firms, Stabinski & Funt, P.A. has helped many people sort out their legal rights, responsibilities, and remedies. For 45 years, we have been the trusted advocates for countless traffic collision victims, and we are highly experienced in handling a wide range of auto and truck accident cases. We also work on a contingency basis, which means that if there is no recovery, there is no fee or cost to you. If you wish to learn more about how our firm can be of assistance to you, we encourage you to contact us for a free consultation by calling 305-643-3100 or filling out a case evaluation form.

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