Insurance subrogation is not a widely known or well-understood field of law, even within the insurance industry. Yet, subrogation is the mechanism by which insurers can be paid back for claims they paid out to their insureds while holding the responsible party accountable for the damage they caused. Misunderstandings and lack of available education on subrogation can limit an insurer’s ability to recover losses they have every right to recoup.
Rathbone Group is a committed advocate for the insurer’s right to recovery, and providing education about subrogation is one way we help clients and subrogation counsel across the country help maximize recoveries and minimize cost with effective, informed subrogation strategy. Here, we briefly outline the basics of subrogation law and provide helpful resources for in-depth discussions on important topics to consider in navigating insurance lawsuits.
The Meaning of Subrogation
Subrogation is the concept that an insurer, once they have paid out a claim to their insured, can “step into the shoes” of their insured in order to pursue the negligent party for claim damages. Subrogation is a vital legal mechanism that serves several purposes:
- Protects the insurer’s viability. Without a way to recover claims paid out to insureds, carriers would have no ability to offer quality services at affordable prices.
- Protects the insureds experience. If carriers are able to recover claims, they can continue to provide comprehensive, affordable policies and quick claim payments.
- Holds negligent or tortious parties accountable. Without the insurer’s right to pursue the negligent party, there is far less incentive for bad actors to change future behaviors that may be dangerous, unethical, or even malicious.
Find an in-depth explanation on subrogation in: The Right to Recovery: Understanding Subrogation Claims.
How a Subrogation Claim Works
Depending on the context of the loss and resulting claim, as well as the jurisdiction in which the case is brought, the subrogation process can be straightforward or extremely complex. However, we can describe the general course a subrogation action takes:
- Claim Payment: The carrier reimburses their insured for damages/loss caused by another party.
- Investigation: The carrier, subrogation lawyer, or claims adjuster investigates liability, collects evidence, and analyzes the potential for subrogation recovery.
- Subrogation Demand: Provided the investigator(s) finds the claim viable, a demand letter is sent to the insurer of the responsible party. A subrogation lien letter is also sent to the insured to notify them the carrier intends to pursue the claim.
- Negotiations: Sometimes, the opposing carrier will agree to a settlement. Other times, mediation or arbitration can resolve a budding insurance lawsuit without the need for litigation. Still, some subrogated claims escalate to litigation, and the matter is heard in civil court.
- Settlement: Depending on which route was taken in the negotiations phase, a settlement is decided – by the carriers, a mediator/arbitrator, or a judge/jury.
- Subrogation Litigation: A lawsuit is filed which can lead to a judgment awarded. If not reimbursed through negotiations within a lawsuit, a judgment can be enforced to obtain payment to the carrier and any other parties involved in the case who have legitimate claim to a portion of the award.
Find an in-depth look at alternatives to subrogation lawsuits in: Alternate Avenues to Recovery: Subrogation Arbitration.
Subrogation Rights & Responsibilities
Both insurers and insureds have roles in the subrogation process:
- The insurer has the right to pursue the party responsible for the amount of the claim they paid to their insured. This holds the tortfeasor accountable and protects the insured from dealing with a lawsuit.
- The insured has a responsibility to preserve the insurer’s right to subrogation by cooperating in the subrogation process when necessary, and to avoid signing subrogation waivers or releases without express consent of their carrier.
Find a detailed explanation of subrogation waivers in: Understanding What is a Waiver of Subrogation.
Common Applications of Subrogation
Subrogation lawyers work in a variety of fields and jurisdictions. The specifics of the law and what approach subrogation attorneys take will depend on the context of the claim. Some of the clientele Rathbone Group serves include:
- Insurance companies
- Self-insured companies
- Third-party administrators
- Captive owners
- Government risk pools
A few of the fields in which our subrogation attorneys work include:
- Automotive claims
- Government entities
- Property and casualty
- Product liability
- Supply chain
- Workers’ compensation
- Cyber liability
Find more on Rathbone Group’s subrogation clients in: Who We Represent
Available Resources on Subrogation Law
For insurers, nothing improves the chances of recovering losses more than being informed on the nuances of the subrogation process and retaining a subrogation law firm focused on education and strategy. A proactive approach to your subrogation claim starts with exploring concepts and cases so that when a letter comes across your desk, you’re ready. Here are a few links to free educational resources on insurance subrogation:
- RG Subrogation Blog
- What you’ll find: Articles about specific laws, developments, and subrogation cases.
- On Subrogation Podcast
- What you’ll find: In-depth discussions on the subrogation process and case law.
- RG YouTube Channel
- What you’ll find: Short, digestible videos on specific subjects in insurance law.
- Subrogation Practice Areas
- What you’ll find: An overview of many of the fields in which our subrogation attorneys work.
If you have questions or want more information on Rathbone Group’s subrogation services, reach out to info@rathbonegroup.com.