In the context of a lawsuit or claim, subrogation is essential the means through which an insurance company, or any other party, steps into the shoes of another party in order to assume that person's rights and remedies. In the context of a car accident case, it refers to your insurance companies right to seek recovery for expenses it paid due to the negligence of the driver that hit you. If your health insurer or automobile insurer, often under your Personal Injury Protection coverage, pays medical expenses or other expenses due to the at-fault driver's negligence, the insurance company has a right under its policy with you to recover those expenses.
In reality, your own insurance company often comes to you or your personal injury attorney and asks for repayment directly from the settlement amount. Whenever you are contemplating settling a car accident or personal injury case in Washington, be aware that your own insurance company is entitled to recovery, subject to a reduction.
In Washington, the amount you pay back to your insurer is reduced pro rata based upon your attorney fees and costs. This reduction, known as a Mahler reduction, stems from the case MAHLER v. SZUCS in which the court held the insurance company, when essentially riding your personal injury attorney's coattails, must reduce the amount sought based on your attorney fees. In most instances, the Mahler reduction results in a 1/3 reduction of the amount you owe your health or auto insurer.
What does all this mean to your car accident case?
You must keep in mind that in addition to your attorney fees, you must also repay some of the money expended by your own insurer due to your injuries. While it may seem odd to have to repay these amounts, you are obligated under your policy to make these payments. Your attorney can help work with the insurer to make sure that your rights are protected and negotiate the amounts and terms or repayment.
Additional resources provided by the author
Our website has additional information regarding subrogation. You may also visit the Washington Insurance Commissioners site for additional information regarding your rights as an insurance policy holder.
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