Subrogation

Subrogation is a legal doctrine which allows your insurance company to get their money back, from you, after you recover damages from the negligent person who injured you in a car accident. Subrogation is legal, and enforceable, yet most people don't know about it until they are hurt.

Subrogation usually involves PIP payments made by your car insurance company, but can also involve your medical insurance, when you are injured in a car accident, or even a slip and fall case against a property owner.

Many people think its unfair that they pay for car insurance, and after their insurance company pays the medical bills, they have to return the money if they get a settlement from the negligent driver. It may seem unfair, but it is written into your insurance policy, whether you know it or not, and it is legal.

But, the insurance companies are only allowed to get their money back under certain circumstances. The injured person must be "fully compensated" by the settlement. This usually means the injured person must collect the full liability limits of the negligent person's insurance policy. If you settle your case for $24,000, and have $10,000 in medical bills, you will have to pay back your own insurance company the $10,000. If you settle for the $25,000 in liability policy limits, you don't have to pay the PIP money back. It is important for you to fully understand the consequences of settling your case, and the best way to know is to consult an attorney. See the case of Mahler vs Szucs.

If  you retain an attorney, and reach a settlement, you only re-pay a percentage of the PIP, regardless of whether you obtain the "full policy limits." The reason for this is a ruling of the Washington Supreme Court, in a case called Mahler vs. Zsucs, in which the supreme court ruled that an insurance company must pay the same fee for recovery of its PIP payments as the injured person. This means that if your attorney is paid 1/3 of the settlement as attorney's fees, the PIP repayment is reduced by 1/3. In essence, this means that you are paying an attorney's fee only for your pain and suffering, and the insurance company is paying the attorney's fee for the medical bills.