Subrogation - how it affects us

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PostPosted: Mon Sep 27, 2010 9:03 am   Post subject: Subrogation - how it affects us  

Hi, I've come across 2 terms related with subrogation namely - 'right of subrogation' and 'waiver of subrogation'.

I've just come across them while surfing but their definition is not quite clear. Please tell me what they actually mean and how they affects us.

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PostPosted: Tue Sep 28, 2010 4:19 am   Post subject:   

A waiver is the voluntary giving up of a legal right. Now that that's in the open, here's the rest of your answer.

Subrogation (right of subrogation) is an insurance company's legal right to collect from a third party for any first party claims it has paid due to the negligence of that third party. Or to be reimbursed by its first-party insured from any money the insured obtains directly from the third-party or its insurance company.

Example: In 1973, my dad was on his way to work, and involved in a traffic collision. As a "mileage" employee of the County of Los Angeles, he was generally required to have a vehicle available for his use during work hours. So when driving to/from work/home, he was covered under workers' compensation. What complicated matters was the fact that my dad's auto insurance company was the same company as the third-party's. How do you defend against yourself? By trying to find any excuse not to pay the claim.

My dad's injuries were such that he was hospitalized for nearly three months, and was still in traction in a hospital bed at home for a couple of months after that. Rather than be taken to the nearest ER by the fire department paramedics, he convinced them to take him to the Kaiser Hospital, since he was a Kaiser insured. Kaiser "paid" his medical bills -- surgeries, hospitalization, physical therapy, etc. etc.

Workers' compensation eventually paid his lost time from work, and when the whole case eventually went to trial a few years later, and after the settlement was negotiated in the middle of the trial, both the workers' compensation carrier (actually LA Co was self-insured) and Kaiser came to the table demanding their subrogation rights . . . since the driver of the vehicle that squashed my dad's car was responsible for all of the money they both "spent' as a result of his negligence.

Well, my dad's lawyers (from a very well-known trial attorney's firm) screwed that one up big time. Completely failed to take subrogation into account when they agreed to a paltry $50,000 settlement (on a $1,000,000 commercial auto policy), and never asked for medical or WC reimbursements in addition to anything. So they got their 33% off the top.

Kaiser wanted $30,000+ and LA County wanted some $17,000. Well, when push came to shove, Kaiser realized it was going after the wrong party and ended up getting its $30,000 from LA County, since it was a WC claim, and had to be paid to them 100% by LA County.

LA County's lawyers screwed up because they didn't add that into their equation for demand, and only recovered the $17,000 in lost wages they asked for, not the $47,000 they should have been were entitled to. It could have worked out that my dad ended up with $0, instead of about $12,000.

What LA County had to agree to do was

"waive" its "right" to subrogate
the $30,000 unpaid balance, because they did not file a claim against the third party. They chose the simple route, expecting my dad to recover big bucks without having to expend any legal effort of their own.

As a first-party, if you collect from a third-party, your first-party insurer has the legal right to collect from you (to subrogate) what they could have collected from the third-party. But without any effort on their part.

So there you have it, a real life example of both the right of subrogation and the waver of subrogation in the same loss event.

I learned about that then, too. I was about 4-5 years before I found my way into the insurance industry in 1980. It was an eye-opener that I have never forgotten. And it genuinely soured me on PI attorneys who don't put in the effort to build a proper case or settle for the proper amount of money.

If I'm ever involved in a similar situation, God forbid, I know how to handle it properly without getting an attorney involved (too soon, if at all).


CA-licensed Life & Disability Analyst. CA Insurance Lic #0596197. Also investigating insurance company abuses, and providing litigation support/expert witness services. Send me your questions, and I'll send you my answers.
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PostPosted: Tue Sep 28, 2010 11:57 am   Post subject:   

I think this 'right of subrogation' is some what like pursuing another person's claim. It might arise out of an agreement between parties or might emerge automatically (as per laws).

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PostPosted: Tue Sep 28, 2010 12:51 pm   Post subject:   

There are some possibilities for such waiver of subrogation. Quite often you'll come across provisions in leases that state how the landlord and the tenant have agreed not to recover loss from each other to the point it's covered by insurance.

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PostPosted: Mon Dec 19, 2011 5:21 pm   Post subject: welding electrodes  

Hah, seriously? That's rediculous. No way

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PostPosted: Thu Feb 05, 2015 6:31 am   Post subject: subrogation.  

True story. I just got screwed and rewed by my health insurance company. Insurance companies are a bigger fraud than the US government.

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true story

PostPosted: Tue Mar 31, 2015 6:26 am   Post subject:   

If you are not experienced, its a tricky business for you.

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PostPosted: Sat Apr 04, 2015 8:04 am   Post subject: automobiles  

Regular preventive maintenance is probably the single thing you can do as a car owner to keep your ride happy and save money on repairs in the future. However, not everyone agrees on what preventive maintenance is, what you should do, and when you should do it. Let's clear that up, and give you some tips that'll apply to any vehicle.



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