What You Need to Know About Insurance Subrogation Claims in California

In California, insurance companies have the right to pursue subrogation. Here’s everything you need to know about insurance subrogation claims in California.

In a personal injury case, negligence must be established to determine who is at fault. This can happen through out-of-court negotiations or lawsuits; an individual can file for compensation for both economic (such as medical bills, car repairs, and income missed due to time out of work) and non-economic expenses (such as emotional distress). Subrogation is the process of recovering damages covered by an insurance policy in a personal injury case when the policyholder is not the one at fault.

What is Subrogation?

Immediately following the incident of personal injury, most insurance companies require that policyholders file a claim for any damages regardless of who was at fault for the incident. In many cases, such as a car accident, the insurance company will cover the damages. Information on other common personal injury cases can be found here.

However, California is a comparative fault state, meaning that the parties involved in an incident of personal injury will be responsible for covering the percentage of the damages according to the percentage of responsibility they are determined to have. For example, if a California court deems one party to be 75% responsible for a car accident, then they are liable to cover 75% of the damages. California also gives insurance companies the right to obtain reimbursement from the insurance company of the party at fault. The insurance company’s compensation award will depend on the percentage of fault of the policy holder. This process of reimbursement to an insurance company is called subrogation.

Related: California Pure Comparative Negligence

According to California law, insurance companies can always pursue subrogation. An individual policyholder cannot sign anything that concedes their provider’s right to the process.

Are Deductibles Covered?

A deductible is the amount of money a policyholder pays for damages before their insurance company covers the rest. Deductibles are pre-determined in an insurance policy. The lower the deductible, the less expensive the insurance policy will be. Deductibles are typically numbers such as $500 or $1,000. In a subrogation process, an insurance company is obligated to request reimbursement for a deductible as well, unless the policyholder recovered the deductible by some other means.

However, if the insurance company is pursuing subrogation and deductible recovery is included in their subrogation demands, they are not allowed to subtract any legal fees from the deductible reimbursement to the policyholder unless the policyholder used an outside attorney to collect the deductible. In this case, the deduction from the reimbursement must be proportional to the expense of the outside attorney. This does not apply for disability and health insurance subrogation processes. More information on fair claims settlement practices in California can be found here.

What Kinds of Insurance Payments Can be Subrogated?

Any type of payment covered by an insurance provider for personal injury damages can be subrogated (so long as the policy holder was not at fault). This can include the following types of payments:

  1. Auto insurance
  2. Medical bills
  3. Health insurance

Related: Types of Damages in a Personal Injury Lawsuit

What is the Policyholder’s Role in Subrogation?

Policyholders do not make subrogation claims. In the event of an accident or other incident of personal injury, a policyholder’s primary responsibility is to file a claim with their insurance company. Additionally, a policyholder can choose whether or not to pursue a settlement with the other party, which might entail mediation or a court proceeding in order to determine who is at fault. However, subrogation is up to the discretion of the insurance company.

According to California insurance standards, insurance companies must notify policyholders if they intend to pursue subrogation of a claim. If they do not wish to pursue subrogation, they must also notify policyholders, and include a statement that the policyholder is entirely responsible for the pursuit of compensation. The only event in which the insurance company is not required to notify policyholder’s of their decision regarding subrogation is if:

  1. The deductible was waived.
  2. The coverage for the claim did not require a deductible.
  3. The damages did not exceed the deductible amount.
  4. There is no legitimate grounds for pursuing subrogation (for example, if the policyholder was at fault for the accident).

Hiring a Personal Injury Lawyer

It is highly recommended that policyholders have their own attorneys during the process of negotiating a personal injury settlement, especially if the other party is disputing their own liability. It is also advisable to wait to settle a personal injury case until a certain amount of time after the incident, because many damages may manifest themselves later on. For example, an injury that may have appeared to be minor directly following a car accident may end up developing more complications later on. If the policyholder already accepted an offer from the other party prior to the additional medical bills, then the bills won’t be covered in the settlement. An experienced personal injury lawyer will be able to advise clients about waiting until they know the full extent of their damages. Hiring a personal injury lawyer may also increase the value of the settlement that an individual receives: according to the Insurance Research Council, individuals who settle personal injury cases with lawyers receive 3 ½ times more compensation than those who do not.

Contesting Insurance Coverage

Additionally, many insurance companies have their own lawyers and may wish to negotiate regarding the value of claim damages (for example, car repairs in a car accident). In this event, policyholder’s should consider hiring an appraiser (as long as this is allowed in the insurance policy) in order to have an independent opinion on the amount of damages there are. In the event that an insurance company acts in bad faith against a policyholder, they may be liable for a lawsuit. More information on bad faith insurance lawsuits can be found here.

Contact Us

If you or a loved one has any more questions about insurance subrogation claims in California, contact us. We’ll get you in touch with the most qualified attorney for your legal issue. Your experienced attorney from Her Lawyer won’t charge you a dime unless you win your case.Get your free consultation with one of our California Personal Injury Attorneys today!