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What is subrogation and how does it affect my settlement amount?


Hi, I’m Steve Knapp. I’m an attorney and partner at the Brett Murphy Law Firm. I want to talk today about something called subrogation. Now I can already hear some of you out there asking:

“What the heck is subrogation and why the heck should I even care?”

Well I’ll tell you, if you’re ever in a situation where you or a loved one have been injured by the negligence of another person, and there’s insurance coverage that pays benefits whether it’s medical bills or loss of income on your behalf or on behalf of the injured person, it’s a big deal!

In Washington State as in most other states, every insurance company pays benefits for a claim, called a 3rd party claim, which just means that another person has negligently caused an injury or death. The insurance company is entitled to recover all of the money that they pay for the medical treatment and loss of wages on behalf of the injured person.

Now I have had clients say:

“You mean I can pay my insurance premiums, regularly, for 10 years. When I finally need to use the benefit of my insurance company and when they pay those benefits, I have to repay them out of the settlement against the other person?” And I have to tell them: “Yes, that is the truth.”

And it’s very important that you understand how subrogation works or that you hire an attorney who understands it because I recently had a client who settled his case for $50,000 dollars and he had $30,000 in medical bills that were paid for by his own insurance company. Yet at the end of the day, his insurance company expected to be paid their full $30,000 out of my client’s $50,000 settlement.

Now, obviously if they had taken that claim and had been reimbursed, that would have been a big chunk out of my client’s settlement and he would have been pretty upset and I would be too. But fortunately I was able to negotiate with his insurance company and I got them to waive their subrogation claim. That had the effect of basically putting $30,000 back into his pocket.

Now we can’t always get the insurance company to waive their subrogation claim, but more often than not we can get them to reduce or even greatly reduce their subrogation claims, and dollar for dollar, every dollar we can get the insurance company to reduce their subrogation claim is an extra dollar in our clients pocket and that’s what we do to maximize our clients’ settlements.

So, how would you have heard about subrogation? If you have health insurance, car insurance, or labor and industry workers compensation insurance, and you have a claim where you’ve been injured or one of your loved ones has been injured or killed by the negligence of another person, you will get a letter of subrogation from your insurance company telling you and reminding you that in your contract you are obligated to repay them for any benefits that they pay due to the negligence of this 3rd person. That’s where having an attorney who is familiar with the issue of subrogation can come in very handy, because the subrogation claim affects your bottom line net settlement, and if you don’t negotiate properly to reduce or waive that subrogation claim, it can eat up a big chunk of your settlement and we don’t like that to happen to our clients.

So we at Brett Murphy deal with subrogation claims and insurance companies day in and day out, and we are able to maximize your recovery by minimizing the insurance company’s subrogation claim. We’re here to help you. You can reach one of the experienced Brett Murphy personal injury attorneys by calling 1-800-925-1875 or by completing a confidential contact form.