Close Icon

Craig Consulting Services Newsletter

Stay up to date with our blog posts, case studies and much more! Simply sign up below:

Main Menu

Subrogation From an Insured’s Perspective

Subrogation is the right for an insurer to pursue a third party that caused an insurance loss to the Insured. This is done as a means of recovering the amount of the claim paid to the insured for the loss.

Subrogation refers to the process an insurance company uses to seek reimbursement from the responsible party for A claim it has already paid.

Subrogation matters to you if:

  • you have a covered loss, and
  • you submit a claim to your insurance company for disability benefits, but
  • another party is actually responsible for all or part of the damages (i.E. You have a car accident and the other driver Caused the accident or you are a passenger in the vehicle)

In this case, your insurance company may pay your disability claim, and then seek reimbursement from the other Party. This would depend on the circumstances surrounding the loss, the laws in your province and your policy Provisions.

If your insurance company decides to pursue subrogation, the company will work to recover the disability benefits Paid to you from the responsible party.

How reimbursement amounts are calculated

Dependent on the laws in your province, you may be be required to reimburse the insurance company the disability Benefits they have paid to you if the other party was 100% or even partially at fault for the accident and subsequently Your injuries.

Often times though, it is not that simple. Based on the different factors that come into play, the calculation of the Reimbursement amount can become quite complicated. The reimbursement the insurance company seeks can Depends on several factors, including the amount recovered, the amount claimed (based on the amount the various Parties were at fault), and provincial laws.

Generally, you would receive a wage loss amount from the responsible (at fault) party the insurance company will Seek reimbursement of the disability benefits they have paid to the date. However, precisely how the reimbursement Amount is determined varies by province and by the terms of the insurance policy.

These examples outline general rules that apply in some provinces—please discuss the specifics of your case with Your legal representative or insurance company.

Example 1: other party is 100% liable, but only paid part of the amount

The total amount of disability benefits paid is $10,000. The other party was 100% responsible for the damages. Subrogation claim is for $10,000.

  • In theory the insurance company will request repayment of the full amount, to the extent of the benefits they paid Out. If the insurance company only paid $8,000.00 in disability benefits the they can only expect to recover up to That amount
  • Legal fees are typically deducted from your recovery to determine your net, or actual in pocket, recovery. (before You are required to pay back to the insurance company
  • In this example your recovery was $10,000 but you paid your lawyer a contingency of 33%
  • This means your actual in packet net recovery is $6,700
  • You would be required to pay the entire amount back to the insurance company

Example 2: other party is partially liable for the accident

The total amount of disability benefits paid is $10,000. The other party was 60% responsible for the accident. Subrogation claim is for $6,000.

  • The Insurance Company should only be able to recover 60% of the Disability Benefits paid to you
  • In tis case they would recover $6,000 in satisfaction if their Subrogation Claim
  • This of course would be subject to a portion of legal fees that your legal representative charged you.
  • Using the same contingency as in the above example, 33%, the Insurance Company would be eligible to recover the $6,000 less 33%, or $4,620.

I trust you found this informative and if you have any questions or comments please fell free to post or contact me Directly.