In an ideal world, the victim of a motor vehicle collision or other type of accident will have health insurance coverage in addition to their auto insurance policy, which should also include Personal Injury Protection (PIP) coverage.
These forms of coverage will ensure that an accident victim does not have to pay for his or her medical expenses out of pocket while a personal injury claim is being pursued.
The accident victim’s PIP coverage and health insurance plan – assuming they have adequate coverage – the insurance companies should be able to cover his or her medical expenses while they receive treatment and their attorney negotiates a potential settlement.
But claimants often are surprised at the conclusion of their claim that they must pay back the money that the insurance company provided to cover the medical expenses in the first place.
Subrogation Clauses in Insurance Contracts
The reason a person pays monthly premiums for auto insurance or health insurance is to ensure coverage for medical bills and other expenses in the event of an accident.
In some cases, insurance will cover the costs of medical treatment and other expenses and that’s all there is to it. But if a claimant receives a third-party settlement or verdict award through the representation of an attorney, the company who paid for the victim’s expenses in the first place is expected to be reimbursed for those costs.
It’s really all about liability and which party should be held financially responsible for the damages that resulted from an accident. In a typical car accident, the insurance company of the at-fault driver who causes property damage and/or personal injury to another person or party is expected to cover those damages to the extent of the insurance policy.
But when an insurance company covers damages for its own insured in an accident where another party was determined to be at fault, they see that as something they shouldn’t ultimately be responsible for paying. As a result, a portion of the third-party settlement or verdict that is eventually paid to the claimant is expected to be used to reimburse the insurance company who paid for expenses at the beginning.
Understanding Subrogation Helps Develop Realistic Expectations
Many personal injury claimants are surprised when they find out that their own health or auto insurance provider expects to be reimbursed for covering their medical expenses after an accident in which another party was at fault. It makes sense if you think about it – they agree to cover your financial liability if you cause an accident, but if another person or entity is at fault then they don’t feel they should have to pay for that person or entity’s negligence.
And when a third-party insurance company provides financial compensation to an accident victim, part of that compensation is meant to cover the medical expenses that were incurred following the accident. Since the victim had health and auto insurance to cover these expenses, they likely didn’t have to pay anything out of pocket for their bills. This makes the subrogation process even more sensible, as the claimant isn’t losing out on any money since they never had to pay for anything in the first place.
For more information about subrogation and car accident claims, check out this helpful webpage about the subrogation process from DMV.org. If you believe you may have grounds for a car accident claim, contact the Davis Law Group at 206-727-4000 or contact us online here.