This article is a companion piece to this video
In this episode of On Subrogation: Concurrent Coverage Redux, RG subrogation attorney Jason Sullivan revisits the concept of contribution between carriers using a real-life case example from his portfolio. How important is policy language in a dual coverage subrogation claim? Extremely.
To illustrate the nature of how concurrent coverage issues play out in the legal arena, Jason uses a case study. He once had a client refer a case to him. The client was an auto insurance carrier who insured a mother of a college student. Her son was home from school on a weekend and had borrowed her car, with her permission, to run errands and visit with others. While out, he was in an accident.
Initially, the client paid out the claim to the mother under the liability coverage in her policy. However, they then found out that the son also had his own liability coverage, meaning his carrier would also carry responsibility for paying the claim. The client suggested they take a second look at subrogation potential under a theory of contribution between carriers.
Learn more about contribution between carriers on another episode of On Subrogation.
Pursuing a Non-Responsive, Partially-Responsible Party
First, they reached out to the other carrier, who denied the claim citing lack of coverage. When they asked for more information, the carrier became non-responsive. Jason then reached out directly to the claims adjuster to ask for more information on the policy language and received no cooperation or even a response.
The mystery here was that there was a policy, but the carrier kept citing no coverage and refused to elaborate on the policy language. If there was concurrent coverage, there may be competing knock-out clauses in the policies that would result in pro-rata application and allow his client to partially recover. Jason had to file a lawsuit to move forward.
The carrier responded that there was no coverage because the car the son was driving was not listed on the mother’s policy. Reaching out to work directly with the adverse carrier’s attorney, the two quickly figured out the problem. It was “you.”
Jason thought they were subrogating mom’s carrier vs the son’s carrier, but in actuality the son was on mom’s secondary policy. Therefore, they were actually subrogating mom’s insurance vs mom’s insurance. This mattered because there was a policy exclusion that stated any car owned by “you” that is not listed on the policy is not covered. If the son is “you,” coverage exists, but if the mom is “you,” it does not.
Policy language is all-important in ensuring parties who have the right to subrogation recovery are able to maximize said recovery by ensuring all creditors that share in responsibility contribute to the claim. It’s also all-important for all parties to avoid wasting time and money pursuing a confused case because people refuse to provide the necessary policy language. Skilled subrogation counsel experienced in the automotive insurance industry is the key to achieving both these things and maximizing a carrier’s ability to recover losses via equitable subrogation.
Interested in learning more about the subrogation process and how to strategically handle complex claims? Visit Rathbone Group’s YouTube channel and podcast library for more free educational resources on subrogation and recovery law. Have a question we haven’t yet covered? Reach out at video@rathbonegroup.com or podcast@rathbonegroup.com to see your topic discussed on a future episode.