A subrogation claim lets an insurance provider seek reimbursement. Here’s what know about subrogation claims in California.

Most common in car accidents, property, and personal injuries, subrogation claims are the right of a plaintiff’s insurance company to claim recompense, often from the defendant’s insurance company, after paying for the plaintiff’s losses.

Related: Insurance Subrogation Claims in California

How Does A Subrogation Claim Work in California?

A subrogation claim may be completed by a personal injury attorney and the plaintiff’s insurance carrier. Effectively, if the plaintiff’s insurance company pays for the plaintiff’s accidents, insurance carriers may seek compensation.

After an accident, an insurance company can send the plaintiff a letter about the details of the incident. Additionally, the plaintiff may be required to provide information about legal proceedings and the relevant insurance policy staking rights to full reimbursement.

An insurance company “steps into the shoes of the policyholder,” and claims the same rights and legal standing as the injured plaintiff for compensation. If the plaintiff cannot sue the defendant, neither can their insurance company.

Related: Types of Damages in a Personal Injury Lawsuit

The Process for Filing a Subrogation Claim

The subrogation claim process is similar in most states. The plaintiff plays a minor role but should stay in communication with the insurance company. The insurers of both the defendant and plaintiff reach an agreement together.

A waiver of subrogation can be a risk for the plaintiff to take, as the insurance company is unable to receive damages from the defendant. Depending on the contract between the plaintiff and insurer, subrogation clauses may be written to prevent the plaintiff from waiving subrogation.

Benefits of Subrogation Claims in California

The subrogation process prevents the injured party (plaintiff) from recovering their losses twice. For instance, if health insurance paid for the plaintiff’s medical expenses, the plaintiff cannot receive the same compensation from medical bills.

At first glance, a subrogation claim may diminish the plaintiff’s deserved reparations. However, subrogation protects the plaintiff from outside medical expenses if liability and subsequent damages have not been hashed out.

Related: California Pure Comparative Negligence

Insurance Claim Timeline in California

Within 85 days, an insurance company must settle the claim. Within 15 days, an insurance company must acknowledge the claim and send the plaintiff instructions and paperwork, including proof of loss. An example of a proof-of-loss claim is found here.

The insurer has 40 days to decide on the claim after receiving the proof-of-loss forms. The insurance company has 30 days to make a payment if the claim is approved.

The time frame for settling a subrogation claim depends on factors like:

  • Serious or complicated injuries
  • Poor communication between all parties involved

The plaintiff has the right to a speedy settlement. If the insurance carrier violates the law, the plaintiff may file a “bad faith” lawsuit. If successful, the case may award the plaintiff with the original settlement amount and added interest and penalties.

Insurance Laws in California

Under California state insurance laws (Section 3040), insurance providers cannot claim a majority of the plaintiff’s settlement. If the plaintiff has an attorney, insurance companies may recover:

  • Up to a third of the value of the final settlement
  • Any reasonable sum the injured plaintiff paid for health care services

Without an attorney, insurers may recover:

  • Up to half of the settlement value
  • Any reasonable sum the injured plaintiff paid for health care services

By the “Made Whole” doctrine, personal injury plaintiffs must first be “made whole” in financial terms before an insurance company has a right to reimbursement. Issues may arise when the defendant is unable to procure the necessary funds. However, select insurance companies may write contracts nullifying the Doctrine.

California’s “Common Fund” Doctrine requires any insurance company without legal representation to pay part of the subrogation money to the attorney of the plaintiff. Additionally, if a judge finds the plaintiff partially responsible, the settlement value is reduced proportionally compared to the cost of the recovery.

Service of Process for A Subrogation Claim

If the plaintiff’s insurance company files a subrogation claim, the defendant should be served with a summons and complaint by a third party with the information about the claim. The plaintiff will also receive a subrogation letter.

A plaintiff may not receive the full settlement because of subrogation. Without the subrogation claim, the plaintiff is required under California law to share the settlement price with the insurance company that paid. However, with subrogation, insurance carriers seek reimbursement from the defendant instead.

FAQs About Subrogation Claims in California

How long do subrogation claims take to process?

Depending on the complexity of the accident and if the declaration of fault is difficult to determine, the subrogation process may take longer. However, the plaintiff may not be involved.

What is the statute of limitations for filing a subrogation claim?

The statute of limitations for filing subrogation claims is three years.

Should I waive subrogation?

Though the plaintiff may waive subrogation, doing so is not recommended.

What do I do if I receive a subrogation letter?

Contact an insurance agent and a lawyer for advice.

Can I ignore a subrogation letter?

Ignoring a subrogation letter does not make the letter go away. If the recipient chooses not to respond, the insurance company may continue to mail requests and also file a lawsuit. If the accident is uninsured, the plaintiff must defend the claim either by themself or with an attorney. Alternatively, a subrogation claim filed against a plaintiff may be negotiated out of court.

How long do insurance carriers have to settle subrogation claims in California?

Under California law, insurance companies have 85 days to settle a filed claim.

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If you or a loved one would like to know more about a subrogation claim in California, get your free consultation with one of our personal injury attorneys today!