Subrogation, in the context of a personal injury claim arising from a car accident, is a legal principle under which an insurance company that has paid a loss under an insurance policy is entitled to all the rights and remedies belonging to the insured against a third party with respect to any loss covered by the policy. What does this mean? Well, it is the process that an auto insurance company uses to recover the money it paid for any claims where another party is responsible. It is probably better understood by using an example:
Let’s assume you were injured in a car accident in Massachusetts. You file a claim for Personal Injury Protection (PIP) benefits with your auto insurance company. The PIP insurance carrier pays $8,000 of your medical bills. You also file a bodily injury claim with the auto insurance company that insures the vehicle that crashed into you. You later settle your bodily injury claim. As part of the settlement, the $8,000 of PIP benefits that paid some of your medical bills are factored into the settlement.
If the value of your personal injury claim is $20,000, the bodily injury insurance carrier will take an offset for the PIP benefits that were paid toward your medical bills. This is because part of the settlement is to compensate you for the medical bills you incurred as a result of the injuries caused by the other driver’s negligence. But, your auto insurance company already paid $8,000 of your medical bills. Therefore, the bodily injury company would reduce the value of your settlement by the $8,000 of PIP benefits paid. Your auto insurance company (the PIP carrier) would then pursue a subrogation claim against the other driver’s insurance company to recover the $8,000 of PIP benefits they paid.
As you can see, personal injury law and insurance coverage can be legally complex. If you are uncertain about what your rights are or whether you are being treated fairly, you should speak with an experienced Massachusetts personal injury attorney. A lawyer that is familiar with insurance coverage and car accident cases can make sure that you are getting the fair compensation you deserve for your injuries and losses.