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On the subrogation claim, and what it means

If you were in charge of an insurance company and you were covering a person who got into a car accident that was caused by a negligent driver, you would cover that injured person. However, since negligence is involved in the car accident that injured your client, a reasonable case could be made that the negligent driver is actually the person who should be paying for the injured person's damaged property and personal injuries.

The injured party may sue the negligent party on his or her own -- but a subrogation action is when the insurance company actually sues the negligent party on behalf of the injured individual (their client). Subrogation means to take the place of another, and in a legal context, it means one party takes the place of another party in a civil claim. The party taking the other party's place is called the "collateral source."

As you can tell, though subrogation as a concept is pretty straightforward, it can become complicated when a case is actually in front of a judge. For example, settling the case can present complicated topics that must be handled -- such as how much the collateral source and the injured party will receive.

State laws vary on subrogation, and when insurance companies or "collateral sources" can bring their claims. As such, it is important for anyone dealing with a subrogation claim to prepare for the case. Consult with an attorney if you are feeling overwhelmed by your claim.

Source: FindLaw, "Insurance Law: What is a Subrogation Action?," Accessed March 4, 2016

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