Subrogation is a process by which an insurance company seeks to recover the costs it has paid out on behalf of the insured after an accident or injury. When an insurance company pays benefits to the insured for damages or losses, it may have the right of subrogation, which allows it to step into the insured’s shoes and seek reimbursement or compensation from the responsible party or their insurance company. In addition to subrogation clauses in private health insurance policy contracts, public insurance programs like Medi-Cal and Medicare have the right to seek reimbursement for the amount they paid for past medical care costs on behalf of a beneficiary or injured plaintiff if they recover damages.
There are two main types of subrogation:
Contractual Subrogation: This legal doctrine is invoked when the insurance policy contains a subrogation clause, giving the insurance company the right to pursue recovery from third parties. In these cases, the insured suffering the injury inflicted may be required to cooperate with the insurer in pursuing the subrogation claim even though they won’t be fully compensated.
Equitable Subrogation: This legal doctrine arises when the insurance company, without a contractual subrogation provision, pays benefits to the insured and then seeks reimbursement from a responsible third party based on equitable principles.
Subrogation allows the insurance company to recoup the costs it has paid out on behalf of the insured, thereby avoiding a double recovery for the same loss. However, the application of subrogation can vary depending on the specific terms of the insurance policy and applicable laws that make it unfair to the insured.