Understanding Subrogation Claims In Arizona
If you have ever been involved in an accident and received an insurance payment to cover the damages, you may have also received a subrogation letter from your insurance company. Subrogation, which is a common practice for insurance companies, refers to the process of your insurance company seeking reimbursement from the responsible party or their insurance company. This reimbursement helps your insurance company recover the costs they paid out to you. While subrogation may be unfamiliar to many policyholders, understanding what a subrogation claim is and how it affects you can be beneficial in navigating insurance matters.
What Is a Subrogation Claim From an Insurer?
Subrogation is a process in which an insurance company seeks reimbursement for payments made to a policyholder due to damages caused by a third party. Insurance contracts often include subrogation clauses, granting the insurance company the legal rights of the policyholder to pursue damages from the responsible party. However, if the policyholder lacks the legal capacity to seek damages, such as when the statute of limitations has expired, the insurance company also loses its right to pursue compensation.
Benefits of Subrogation
Subrogation offers numerous advantages for both insurance companies and the individuals they cover:
- Keeps insurance costs and premiums lower
- Reduces wait times for repairs and medical care
- Makes insurance claims easier for policyholders
- Helps insured people recover their deductibles
Lower Insurance Costs
Subrogation claims play a crucial role in insurance companies’ ability to recover funds from those legally responsible for paying. Without this avenue, the financial burden on insurance companies would surge, leading to higher premiums for customers. Moreover, combating policyholders attempting to exploit the system by filing claims with both their own insurance and the at-fault party’s insurance would become more challenging. The significance of pursuing subrogation claims cannot be understated, as it safeguards financial stability and fairness within the insurance industry.
Reduced Wait Times
Insurance companies are responsible for covering damages that individuals or businesses are legally obligated to pay. However, the process of investigating claims and determining liability can be time-consuming. There is no guarantee that the insurance company will agree to pay for a third party’s damages, which could lead to further delays if the matter goes to court.
Subrogation offers policyholders a convenient option to utilize their own insurance coverage for medical expenses and property damage. By doing so, policyholders can promptly replace or repair their property and receive necessary medical treatment, without having to wait for the at-fault party’s insurance to make a decision.
Easier Claims Process
Dealing with the insurance company of an at-fault party can be a frustrating experience for many. The other person’s insurance typically has a vested interest in denying responsibility for your accident. In cases where the fault is unclear, the other insurance company may not agree with you or your insurance provider regarding liability.
However, there is an option for your insurance company to pursue a subrogation claim on your behalf. This allows you to utilize your own insurance coverage and let your insurance company handle negotiations with the at-fault party’s insurance. It’s important to note that Arizona law mandates insurance companies to include policyholders’ deductibles in their subrogation demands. As a result, the existence of subrogation eases the burden of seeking compensation for property damage when using your own coverage.
This option can be particularly valuable when both parties share some degree of fault. Arizona follows a pure comparative negligence law, meaning that if both parties contributed to the accident, each party can seek damages from the other.
If you and the other party share fault in an accident and you have applicable insurance coverage, utilizing your own insurance to cover damages and allowing your insurance company to negotiate with the other party’s insurance can be advantageous. This approach facilitates faster claim settlements for policyholders while insurance companies handle the intricacies behind the scenes.
Frequently Asked Questions
Is Arizona an Anti-Subrogation State?
Arizona is actually an anti-subrogation state. This means that private health insurers do not have subrogation rights against a person’s personal injury settlement. This standard applies across the board to most private Arizona health insurance plans.
There are some exceptions to this state’s anti-subrogation rule. These exceptions will apply to taxpayer-funded health care plans as well as government-operated health insurance plans. Additionally, there are some employee benefits plans that are allowed to pursue subrogation rights in certain situations.
What About Vehicle Accidents?
Some Arizona residents have auto insurance policies that allow them to turn to their own insurance carrier for medical payment coverage if they are involved in a vehicle accident. You often hear these referred to as MedPay plans. However, if a person receives this insurance coverage while they are awaiting a settlement from an at-fault driver’s insurance carrier, then the MedPay payments may have to be paid back through subrogation.
For example, suppose Justine sustains a back injury after being rear-ended by Samuel. If Justine uses her own insurance to cover $10,000 worth of medical expenses but later receives $20,000 in a settlement from Samuel’s insurance carrier, Justine may have to pay back that $10,000 to her auto insurance carrier.
However, if Justine had private health insurance and used that coverage to hey her medical expenses, the subrogation rules likely would not apply because Arizona is an anti-subrogation state.
What Is a Waiver of Subrogation?
A waiver of subrogation is a contractual agreement where you, as the policyholder, agree not to hold the at-fault party responsible for damages on your behalf. This agreement often arises when individuals seek to settle a claim directly with the at-fault party, bypassing involvement from their own insurance company.
Most insurance contracts stipulate that you must inform your insurance company before signing a waiver of subrogation. Once you have signed such a waiver, your insurance company relinquishes the ability to pursue damages through a subrogation claim.
However, it’s important to consider the potential risks involved. If unforeseen damages or injuries emerge after the settlement agreement, your insurance company may not cover these additional expenses. Prior to signing a waiver of subrogation, it is advisable to consult with a personal injury attorney in addition to speaking with your insurance company.
By enhancing communication with your insurance provider and seeking legal advice, you can make an informed decision regarding the signing of a waiver of subrogation.
Contact Our Arizona Personal Injury Lawyer Today
In the majority of cases, you won’t need to be overly concerned about subrogation. Typically, the entire process occurs discreetly between the insurance companies involved. However, if you have any inquiries regarding your legal rights concerning subrogation, contact our personal injury attorney at Klink Law, PLLC for a free consultation and learn more about how we can help.
