“The substitution of one person in the place of another with reference to a lawful claim, demand or right, so that he who is substituted succeeds to the rights of the other in relation to the debt or claim, and its rights, remedies, or securities” (Black’s Law Dictionary).
“A taking on of the legal rights of someone whose debts or expenses have been paid” (Nolo’s Law Dictionary).
The circumstance where an insurance company takes the place of an insured [person] in bringing a liability suit against a third party who caused injury to the insured [person] (NAIC).
Your insurance company’s right to be reimbursed for medical bills and other expenses from your settlement.
“When an insurance company compensates a policy holder for an injury, often the policy holder’s right to sue the person who harmed him is subrogated, meaning it is transferred from him to the insurance company” (Cornell Law School).
As a result of an accident with George, Sue sustained several injuries for which she had to get medical treatment. George’s insurance company refused to pay for her bills claiming that George was not at fault in the accident. Sue’s insurance company subrogated her right to sue Bill’s insurance company by agreeing to pay her bills. Her company won the case, allowing them to earn back the money they had paid to Sue.
The Utah Supreme Court case Speros v. Fricke is a good example of subrogation. In the case, a passenger of Fricke’s car unexpectedly grabbed the steering wheel causing the car to crash into Speros’ car. Speros’ insurance company covered the cost of his injuries and car damage, then demanded payment from Fricke’s insurance company “under an asserted right of subrogation.”
Other Important Information
This allows you to have your expenses immediately paid by a third party, such as your insurance company or employer, in return for the rights to sue the party responsible for the injury. Once the lawsuit is settled and the payment awarded, the third party will be paid back for any expenses they originally paid on behalf of you. Without this, the insurance company would not be able to sue the responsible party on your behalf and so would have less of a reason to pay for your expenses until the case had been settled and the money awarded.
This right to subrogation is ensured in Utah’s Code (31A-21-108). In Utah, you also will be paid back your deductible if your insurance company is successful in winning back from the other party the money they paid you. If they do not recover the full amount, then you will be paid back in proportion to the full settlement (Utah’s Administrative Code R590-190-10-5). For more on the technical aspects of subrogation see Utah Auto Law by Randall Bunnell.
At Christensen & Hymas, we have been successful in reducing the health insurance company’s subrogation claim, which we give back to you as our client. For example, if you have $15,000 in medical expenses paid by your health insurance plan, we can often negotiate with your health insurance company to accept a reduced amount of $10,000 as payment in full. The additional $5,000 goes to you.