Lately, there has been a trend by private medical insurance companies to request reimbursement out of any recovery an injured consumer receives as part of a settlement from a motor vehicle accident. Referred to as “subrogation”, more and more insurance companies are placing these provisions in their policies. In most claims, this doesn’t pose a problem, except for breaking the news to the injured consumer. Many clients are incredulous they have to pay back their own insurance.

They point out they paid for this coverage so why should they have to pay it back. Some ask if they get to ask for their insurance premiums back. No such luck. The simple answer is their company placed one of these subrogation clauses in the policy. They claim it helps hold down insurance rates. Maybe it cures baldness too. Unfortunately, courts will enforce the policy language. In most cases, this doesn’t pose too much of a hardship if the other driver was fully insured. His insurance should cover all the medical bills on the case as well as any lost wages and still pay a fair settlement for pain and suffering. But what if the other driver didn’t have very good coverage? What if the injured consumer is shorted? He does have a right to try to collect the difference from the guilty driver’s personal assets. However, this is often a waste of time given our bankruptcy laws and debtor protection statutes. So who has priority in these cases, the injured consumer or his insurance company? You’ll be surprised to learn that in many cases the insurance company goes first. Even though you paid for the coverage, they can get in front of you and be paid back before you recover a dime. Some states have enacted “made whole” laws to stop this. These laws typically state that until an injured consumer gets what he is entitled to under the law, his insurance company has to wait. In other words, their right to recover from the guilty driver doesn’t get placed ahead of the injured person’s right to recover. Without these statutes, many drivers are very surprised their insurance company seems to have more rights than they do. They point out they were the one injured. They feel as if they’ve been hurt twice, once by the negligent driver and then again by their own insurance company. I suppose their company does need to make money where they can. How else would they be able to pay those bonuses?

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