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What Is Subrogation?

Donald Singleton
January 11, 2023

Subrogation is a common yet little-known part of insurance policies. It can be confusing to understand and can have a significant impact on your claim and your policy. In this blog post, we’ll explain what subrogation is, how it works, and what it means for your insurance policy. Whether you’re just starting to research insurance or you’re an experienced policy holder, this blog post will provide you with the information you need to make an informed decision.

What is Subrogation?

Subrogation is a legal process in which an insurance company stands in the place of the insured person by asserting their legal rights to recover all or part of their damages from a third party who caused the loss.

This allows insurance companies to collect from a responsible third party and helps ensure that the insured person is made whole after suffering a loss. In most cases, subrogation is an express provision of an insurance policy and is applied when an insurance company pays out its policyholder for damages caused by someone else. When this occurs, the insurance company has the right to pursue legal action against the third party in order to recoup any money paid out on behalf of its policyholder. This is done so that the insurance company can seek reimbursement from a third party that may be responsible for causing the loss or damage to the insured person’s property or person.

In health insurance, subrogation is used to collect reimbursements from medical providers and other parties responsible for payment of medical costs. Subrogation allows the insured person to receive full reimbursement of their health care costs from any liable third parties, ensuring that they are fully compensated for their losses or damages.

By doing this, subrogation helps to reduce the overall financial burden on both the insured and insurer, ensuring all parties are fairly compensated for their losses Also, subrogation is an effective approach for protecting the financial interests of all parties involved. By taking this action, both the insured and insurer are fairly compensated for any losses incurred, thus minimizing the financial burden placed on either side. It allows for a more equitable resolution for any disputed claims.

How Does Subrogation Affect Your Insurance Policy?

Subrogation is a process in which an insurance company attempts to recover funds from someone who is responsible for a claim. This process is commonly used by health insurance companies if they believe that the insured person was not liable for certain medical expenses. The company may pursue subrogation to recoup any losses and may also attempt to obtain reimbursement from a third party, such as an insurer of another individual or organization. Subrogation can prove beneficial for both the insurance company and the policyholder, as it can limit out-of-pocket expenses and ultimately reduce the cost of health care.

In some cases, this could mean that your insurance company will attempt to recover money from you if you are found to be at fault for an incident. In some instances, this could mean that even if you were not directly responsible for an incident, your insurance company could still force you to pay for some of the damages caused. It is important to be aware of this as it can have a significant impact on how much you are required to pay in health insurance premiums.

Knowing how subrogation works can help you better understand the claims process and how it may affect your insurance policy. By understanding this key aspect of the claims process, you can stay well informed and make better decisions regarding your insurance policy.

The Benefits of Subrogation

Subrogation is a cost-effective way for insurance companies to recover some of their losses incurred due to paying out a claim. It involves the transfer of the insurer’s rights to pursue a third party who may be liable for all or part of the amount paid out by the insurance company. The process includes the investigation and proof of negligence and/or liability, which is then used as a basis for any resulting legal action. Subrogation is beneficial to both insurers and claimants as it helps prevent an increase in premiums due to repeated losses, while allowing the claimant to receive the full amount of compensation they are entitled to.

It also serves as an incentive for the policyholder to be more careful in the future, as they may have to pay back any money received from a subrogation claim.  The policyholder is typically aware of the subrogation clause, as it is included in the contract at the time of purchase. It provides an incentive for policyholders to be mindful and vigilant when engaging with outside parties, in order to limit potential damages and the possibility of a claim being filed against them.

Subrogation can also help ensure that insurance companies do not have to pay out large sums of money for claims that are not their responsibility. Similarly, subrogation is a useful tool that helps health insurance companies protect their financial interests while still providing coverage to their customers.

Things to Consider Before Agreeing to Subrogation

Subrogation can be a tricky legal process and it is important to understand the potential implications before signing on and all risks involved with subrogation before signing on as these rights can vary greatly depending on jurisdiction and specific agreements. For example, certain states may recognize a right for subrogation but impose restrictions on how much such a recovery can amount to. Additionally, some insurers may waive their rights for subrogation in order to protect their insured from having to pay costly legal fees associated with debt collection. Subrogation can then be viewed as a double-edged sword and should be carefully considered before being put into effect.

Make sure you understand all of the terms of the agreement and any possible outcomes if you do decide to go through with subrogation. Subrogation is a process in which a third party, such as an insurance company, takes the place of a person or entity to satisfy a debt or an obligation. This means that the subrogee will pay the debt and will be reimbursed by the subrogor. Knowing the terms of the agreement and what may happen if you do decide to pursue subrogation is essential for making an informed decision. It’s important to understand all possible outcomes, potential risks and benefits, and any other consequences that may arise from taking this route. Ultimately, being knowledgeable about subrogation can help protect your financial interests and ensure that you make the right decision for your situation.

Also, don’t forget to evaluate the cost of third-party representation or other legal fees that may be associated with subrogation. Evaluating these costs is a necessary step in the subrogation process to ensure that the process is cost-effective and beneficial for all parties involved.

How to Dispute a Subrogation Claim

Understand the process of subrogation and your rights in the dispute. As a party in the dispute, you have certain rights that must be respected during the subrogation process. Specifically, you have the right to due process and be informed of any decisions impacting you related to the dispute. Additionally, if necessary, you have the right to appeal any proposed resolution by the insurance company. It is important to understand your rights so that you can protect them throughout the subrogation process.

Gather all relevant paperwork and evidence to back up your case for why the claim should be denied. This includes any documentation that proves that the claimant is not eligible for the requested benefits. Such paperwork may include medical records, legal documents, letters of recommendation and other forms of evidence. Being able to provide the necessary paperwork and evidence when denying a claim is essential in order to protect yourself from any potential liability or litigation. Collecting all the required paperwork and evidence may be a time-consuming process but it is necessary in order to safeguard you against any negative repercussions.

File a formal dispute with the insurance company that issued the claim and provide a detailed explanation of why you believe it should be denied. Doing so will help ensure your request is taken seriously and that your concerns are addressed in an effective and timely manner.

Subrogation FAQs

How Does Fault Impact the Subrogation Process?

Fault is the responsibility for an occurrence, typically an automobile accident, that results in the need for insurance coverage. It plays a crucial role in the insurance subrogation process. In order to make a subrogation claim, the insurance company must first establish that the involved parties are at fault and that the third party is liable for the damages. Establishing fault is key to the subrogation process in order to prove negligence and liability. Without it, there is no basis for subrogation or legal action.

Is Georgia law protective of accident victims against insurance subrogation?

Georgia law is protective of accident victims with respect to insurance subrogation. In essence, an insurance company may not subrogate against an accident victim unless the insurance company can show that the victim was at least partially responsible for the accident. This is a higher burden than the typical civil burden of preponderance of the evidence, and is often difficult for an insurance company to meet. The code also limits the amount of subrogation that an insurance company can seek, as well as the amount of attorney’s fees and costs associated with pursuing subrogation.

What are ERISA plans and does subrogation apply to them?

ERISA stands for the Employee Retirement Income Security Act. It is a federal law that sets standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals in these plans. ERISA plans typically include pension plans, 401(k)s, 403(b)s, employee stock ownership plans (ESOPs), and health insurance plans. These plans are established and maintained by employers, labor unions, and other plan sponsors for the benefit of employees. The primary objectives of ERISA are to protect participants in employee benefit plans and their beneficiaries by requiring plan administrators to adhere to certain standards of conduct, provide adequate funding for plans, give participants access to information about their benefits, and ensure that benefits are paid out correctly.

Subrogation applies to ERISA plans when there is a valid insurance policy claim that could be paid by the ERISA plan but will instead be paid by a third party, such as an insurance company, that is legally responsible for the payment. Subrogation allows the ERISA plan to take over the rights and obligations of a third party in order to receive payment from them.

Do all accident claims involve subrogation?

No, not all accident claims involve subrogation, but many do. Subrogation is a legal process whereby an insurance company pays for a covered loss and then seeks reimbursement from a third party who may have caused or contributed to that loss. If a claim doesn’t involve any third parties, then subrogation will likely not be a factor.

How does insurance subrogation work with accident medical bills?

When an insurance company pays for an accident-related medical bill, it will usually require the insured to sign a subrogation waiver. This waiver releases the third party from any liability for the injury or losses related to the accident, and prevents the insured from seeking reimbursement from that third party if they receive payment from their insurance company. A subrogation waiver, however, does not necessarily prevent the insurance company itself from seeking repayment of its expenses.

If a third party is determined to be at fault for an accident, the insurance company may pursue a subrogation claim against that third party in order to recover its expenses. This means that the insurance company may sue the responsible party to recover the money it has paid out in medical bills and other damages. The legal process of subrogation can be a complicated one, so it’s best to consult with an experienced attorney if you have questions about your rights and obligations as an insured party in this situation.

What is the “Made Whole” doctrine?

The Made Whole Doctrine is a legal principle that states that an insurer can only pursue a subrogation claim after the insured has been made whole. That is, the insurance company can only seek reimbursement of its expenses if the insured has both recovered any damages/expenses associated with the accident, as well as compensation for their pain and suffering. This prevents an insurance company from taking a reduction in its payouts while leaving the insured party with a smaller recovery than they would have otherwise been entitled to.

Wrapping up

In conclusion, subrogation is an important part of the insurance process and you should be aware of how it works. Knowing the basics of subrogation and how it can affect your insurance policy will help you make decisions that are best for you and your family. If you have further questions about subrogation or your insurance policy, contact an experienced lawyer who can provide expert advice.

Donald Singleton

Donald Singleton


A Georgia native, Don founded Singleton Law Firm in 1999 as a continuation of his lifetime commitment to serving his state and community. He has concentrated his trial practice to representing victims of serious injury and wrongful death arising out of trucking, car, bus and motorcycle accidents, premises liability and a wide variety of other causes.

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