Updated on: 8/19/2021
When a person is injured in an accident, different types of insurance coverage may provide coverage for the medical treatment they need. Since third-party insurance claims are typically resolved in a lump-sum once the injured person has recovered from their injuries, accident victims are usually left to pay for their medical treatment until the claim has been resolved.
In an ideal world, a person who is involved in a car accident or other type of accident will have health insurance coverage in addition to various types of coverage as part of their auto insurance policy, such as Personal Injury Protection (PIP) coverage. These types of coverage can help ensure that an accident victim does not suffer significant out-of-pocket medical costs while they receive treatment for their injuries from the accident.
PIP coverage can run out quickly in situations involving more serious injuries, at which point the patient's health insurance policy should step in to cover additional medical expenses.
But accident victims are often surprised to learn that should they receive an insurance settlement for an accident, they usually must pay back some or all of the money that insurance companies provided to cover the medical expenses in the first place.
Subrogation Clauses In Insurance Contracts
In some cases, health 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 to some extent.
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 personal injury lawyers at Davis Law Group, P.S., at 206-727-4000 or contact us online.