After a car accident, you may have a growing number of medical bills to deal with it. Hospital stays, doctor visits, medication, and other treatment piled on top of car repairs can make the cost of an accident very expensive. Usually, your insurance company will cover these expenses. If you file a lawsuit against the at-fault driver, you may have to deal with a process known as subrogation if you win.  

Subrogation isn’t a word you hear every day, but it plays a big role in determining your insurance payout. A subrogation claim can be alarming for most people because the insurance company is looking to be paid for their coverage of your injuries, such as long-term disability or medical expenses. If you don’t know your rights regarding subrogation, you may end up paying an unfair amount to your insurer that will reduce the compensation you receive for your injuries.  

What is Subrogation?

The term subrogation is defined as the substitution of one person for another to seek reimbursement of all or some expenses from a third party who caused or contributed to the loss. In other words, subrogation is the legal process your insurer follows to recoup costs paid for a claim from the at-fault driver’s insurance company. If there are delays in recovering expenses from the other driver’s insurance company, your provider will often step in to help pay for repairs and medical bills.  

As the policyholder, you are generally not involved in the subrogation claim process. Insurance companies will negotiate behind the scenes to determine who pays for what. For example, say you were rear-ended while stopped at a red light, resulting in damage to your vehicle and causing you to suffer injuries. You will file a car accident claim with your insurer to cover the costs of repairs and medical treatment. Your provider will then contact the other driver’s insurance company for reimbursement. 

If you then seek legal action against the person at fault for your injuries, a car accident lawyer will negotiate a settlement on your behalf. Your insurer will essentially “piggyback” on top of your claim for damages to get refunded for their losses (what they paid out to you). This repayment can be collected from the negligent driver’s insurance company or deducted from your settlement funds.

What Happens When Fault Isn’t Clearly Defined?

After you report a car accident to your insurance company, an adjuster is assigned to your claim to investigate the circumstances of the collision and determine fault. In some cases, an accident may result from errors on the part of all drivers involved. In these situations, adjusters will assign a percentage of fault to each driver. Fault can be determined at 100% for one driver, 50% for each driver, or any other range of percentages.  

According to the Nova Scotia Contributory Negligence Act, the amount of compensation you and your insurer can recover is proportional to the degree in which each person is at fault. Let’s say that fault is split 50/50 between you and another driver for an accident that caused $10,000 in damages to your car. Your insurance company will make a subrogation claim to the other driver’s insurer for $5,000, reflecting half the costs for damages because you are 50% at fault for the accident. 

It is important to note that all motor vehicle insurance policies in Nova Scotia include coverage under Section B for medical expenses, regardless of who is at fault. In broad terms, the purpose of Section B (also called No-Fault Benefits or Accident Benefits) is to provide accident victims with the financial means to access the medical treatment required to recover from their injuries. Even if it is determined that you are at fault for the accident, you are still entitled to Section B Benefits from your insurance company to cover medical bills, rehabilitation expenses, and loss of income.

How Long Does the Subrogation Process Take?

Following a car accident, subrogation claims will typically begin after fault determination. If the other driver has insurance, is 100% at fault for the accident, and doesn’t dispute your claim, the subrogation process should be quick and relatively straightforward. On the other hand, resolving a subrogation claim can be delayed if an uninsured driver is at fault or it is unclear who is responsible for the accident. In these situations, some people may choose to negotiate a reduced settlement rather than risk an unfavourable judgment in court.  

As the injured party (the Plaintiff), you are responsible for proving that the other driver (the Defendant) was negligent and didn’t fulfill their duty to practice proper care when driving on the road, and this negligence caused the collision and resulting injuries. If your losses are $50,000, but there is a 25% chance you will not be able to prove fault at trial, then a fair settlement would be $37,500, which is 75% of your losses. The subrogation claim should be reduced by the same amount as the claim they paid on your behalf. 

What Does it Mean to Wave Subrogation?

A subrogation waiver is a document that the insurer of the at-fault party will ask you to sign in order to settle with them directly. It suggests they are willing to give you some sort of payment, bypassing the subrogation process. The intent of the waiver is to prevent one party’s insurer from pursuing lawsuits or subrogation claims against the other party. Most insurance companies ask that you notify them before signing a waiver of subrogation. Once a waiver is signed, your insurance company can no longer recover expenses from the at-fault party.  

Generally, insurance policies do not bar coverage if an insured waives subrogation against a third party before a loss. However, coverage is excluded from many policies if subrogation is waived after a loss because this would violate the terms of indemnity (the money paid out by your insurer to cover your losses and damages). In other words, your insurance company may not pay your claim if you waive subrogation after the car accident.  

The Personal Injury Lawyers at Valent Legal Can Help

It’s important to know that subrogation claims are often negotiable. The amount you owe to an insurance company or other party could be far less than what is being communicated. Additionally, your insurance company is required to inform you that they are seeking subrogation. Failing to provide notification of this action is against the law. A personal injury lawyer can help identify the parties eligible for subrogation and ensure you only pay what is necessary.  

As a policyholder, your insurance company agrees to help get you back to where you were financially before the accident. The compensation paid out by an insurer is meant to cover expenses caused by the collision, but there may be other categories of loss that are not taken into consideration. For example, if you are injured in a car accident through the fault of another driver, your ability to earn a future income could be negatively impacted. You may also need medication or ongoing treatment for your injuries. The insurance company should pay for these losses. 

Subrogation claims can be highly complicated and result in unfair compensation for the injured party if pursued without legal representation. The experienced personal injury lawyers at Valent Legal will negotiate with insurance companies on your behalf to ensure that you receive the settlement you are entitled to. We offer free consultations to review your case and advise you on your legal rights and options. If you choose to retain our services, you won’t pay any fees until we recover money for you. That is our no-fee guarantee. 

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