An often misunderstood concept within the sphere of personal injury law is that of subrogation.
The legal concept of subrogation has its antecedents dating back as far as Rome in the ancient period, but the individual who brought this concept into the common parlance and practice of law was British Barrister Lord Mansfield in the 1782 landmark case of Mason v. Sainsbury.
The confusion around subrogation lies in the assumption on behalf of most clients that the settlement amount paid by insurers is what is ultimately owed the client in full. In actual fact, the settlement amount typically will include a certain portion of money which will be repaid to an insurer, thus offsetting their initial cost for medical treatment and any other expenses which may arise.
The key to understanding subrogation is determining who the party at fault in the accident actually is. For instance, if a separate or third party is found to have caused an accident, whatever money is paid to that party by the plaintiff’s insurance is included in the final settlement, and the expectation is that the insurance company’s costs will be covered at the time of settlement.
As Jeffrey M. Baill pointed out in his article, Confessions of an Insurance Subrogation Attorney, “The genesis of the doctrine (of subrogation) is that without it, an insured could double recover—once from the tortfeasor (at-fault party) and once from the insured’s own insurance carrier. In order to prevent such a windfall, the courts granted the insurance carrier a right of reimbursement.”
To build off of Mr. Baill’s point, subrogation exists in order to establish and ensure an essential balance of distribution of monies in a personal injury case, which ideally makes the process equitable for all parties concerned.
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