When a negligent person causes a serious injury or damage in an accident, the affected person often has to rely on their insurance to cover damages. However, the insurance policy may have a subrogation clause that lets the insurer recover the amount they paid for the claim. In Nevada, subrogation allows insurance companies to seek repayment from a third party responsible for the damage.
Subrogation adds extra challenges in personal injury claims, potentially reducing victim compensation. After sustaining injuries, you should work with a personal injury lawyer to help you pursue your claim and ensure that your insurer receives the proper restitution.
Subrogation in Nevada Personal Injury Cases
In personal injury cases, your insurance company has the right to reclaim funds after settling a claim from the other involved party. They may pursue reimbursement from the individual responsible for the damage, typically through that person’s insurance.
Subrogation might come into play if you are in an accident and someone is found to share some responsibility.
For example, you have stopped at a red light, and another vehicle rear-ends you. You file a claim with your collision coverage and receive a check from your insurer to cover the repair costs minus your deductible. After that, your insurer might pursue the other driver’s insurance to recover the amount they paid you. This process is known as subrogation. If they are successful, they could use the money from the other insurance to refund you part or all of your deductible.
Another example of subrogation exists when a person with health insurance sustains injuries in an accident, and the insurer pays $10,000 for medical expenses. The insurance company can then claim that $10,000 from the person responsible for the accident.
Under subrogation law, your insurance company acts on your behalf when they pursue legal action against the third party. They possess all the legal rights you would have had as the injured party.
How Subrogation Works
In an insurance subrogation claim, there are three main parties involved:
- The injured individual
- The insurance provider of that individual
- The party at fault (often represented by their insurance company)
A subrogation claim begins when the injured individual submits a claim to their insurance provider. The insurance company will ask various questions and compensate the injured person for their losses. After this payment, the injured person’s insurance will start a subrogation claim against the party responsible for the damages. Once the injured person is paid, they cannot file another claim against the at-fault party.
The subrogation process is mainly passive for accident victims when another party is at fault. The insurance companies involved mostly work behind the scenes to negotiate and agree on the payment.
This process is intended to protect those who are insured. The insured party benefits since the at-fault party must compensate the insurer during subrogation, helping to maintain lower insurance rates for the policyholder.
When a policyholder and the at-fault party settle outside the regular subrogation process in court, the insurer often cannot legally seek subrogation from the at-fault party. This is mainly because most settlements include a waiver of subrogation.
Why is Subrogation Important in Nevada?
You may wonder why you have to reimburse your insurance company and why your premiums cannot cover the reimbursements. There are two main reasons subrogation is significant in Nevada:
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Preventing Double Payment
Without subrogation, you could be compensated twice for the same damages. First through your insurance company, then again through your settlement. The law aims to prevent this “double recovery.”
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Reducing Insurance Costs
Subrogation allows insurance companies to recover some of their costs, which can help keep premiums lower. Each subrogation case is unique, and the specifics of your situation can impact how subrogation influences your settlement.
A Waiver of Subrogation
A waiver of subrogation is a clause in a contract where the insured agrees that their insurance company cannot pursue a negligent third party for damages. Usually, insurers charge an extra fee for this special endorsement. Such regulations restrict an insurance company from seeking reimbursement from another party for what it has already paid out for a covered claim. If you waive subrogation, you bar the insurer from taking legal action against the other party after settling the claim.
The court can waive subrogation rights in two ways:
- By the insurer in the policy, or
- By you (the policyholder) in an agreement with the at-fault party.
Sometimes, insurers agree to waive their subrogation rights in their insurance policy, but this is rare, especially for auto insurance. These waivers are usually found in:
- Construction contracts
- Lease agreements
Having an insurer waive their subrogation right often means paying a higher premium. Insurers ask for a higher premium because it increases their risk of losing money.
If you and the person responsible for an accident prefer to settle the case without involving your insurance company, you should inform them of any agreements made before they happen. The at-fault party may especially want this settlement to avoid facing a subrogation claim.
However, most insurance companies usually do not accept these agreements. If you agree with the at-fault party, your insurance provider might take legal action against you to recover their costs.
You should, therefore, be cautious before signing a waiver of subrogation, as it may affect your ability to receive full compensation for your losses after an accident. You should also review your insurance policy and consult a personal injury lawyer before making any decisions.
What Happens When Fault Is Unclear in Nevada?
Determining who is at fault in an accident can sometimes be challenging when the fault is unclear. However, figuring this out is essential for deciding who is liable and how much compensation you can claim.
If you are not entirely responsible for the damages, you might not have to pay all your repair costs.
You can choose to file a claim with your insurance, pay your deductible, and let them handle the rest. Since you share some blame, your insurance may seek reimbursement from the other party’s insurer for all or part of the accident costs. If that occurs, you could get back all or part of your deductible.
In Nevada, personal injury claims follow a comparative negligence system. Nevada law allows injured people to seek compensation. This rule applies if they are 50 percent or less at fault for the accident. This rule applies to:
- Personal injury lawsuits
- Subrogation claims
- Other insurance claims
However, the court can reduce compensation if the injured person is partly at fault. The amount depends on their level of fault. For example, if an injured worker is 10 percent at fault, their compensation will decrease by 10 percent. This reduction also affects any reimbursement the insurance company seeks.
The injured person’s level of fault influences both their potential compensation and the insurer’s subrogation rights. The more the injured party is at fault, the less they can negotiate for a settlement or recover from the responsible party. It also impacts how much the insurance company’s legal team can recover through subrogation.
For instance, if an auto insurance company is covering medical costs or a health insurance company is paying hospital bills for their policyholder, they may recover less if the injured party is primarily at fault.
Types of Subrogation
There are three types of subrogation:
- Contractual
- Equitable
- Statutory
Contractual Subrogation
Contractual subrogation comes from the written agreement between you and the insurance company. In these situations, you and the insurer outline the specific terms of your subrogation agreement in the contract. These terms only apply to you and the insurance company named in the contract. A common example of contractual subrogation is collision insurance.
Statutory Subrogation
Statutory subrogation is governed by laws that give certain parties subrogation rights in specific circumstances. This type of subrogation does not rely on a contract and applies to all insurance companies and accident victims who meet the criteria set by the law.
A typical example of statutory subrogation is workers’ compensation.
Equitable Subrogation
Equitable subrogation is also called judicial subrogation. It happens in court cases. Equitable subrogation occurs when you and the insurer disagree about how subrogation should work. In these situations, a judge will resolve the matter based on previous court rulings.
In Nevada, cases of equitable subrogation often relate to mortgages.
Common Claims Often Subject to Subrogation
Many types of insurance coverage and claims in Nevada are often subject to subrogation. They include the following:
Auto Accident Coverage
If you are in a car crash and have collision coverage, your insurance will cover the cost of repairs, regardless of who caused the accident. If the other party is responsible, your insurer can seek reimbursement from their insurance.
Underinsured/Insured Motorist Coverage
Many car insurance plans offer uninsured and underinsured motorist coverage. When you receive benefits from these options, it helps pay for the damages caused by the driver at fault. If you haven’t cleared the at-fault driver from responsibility, the insurance company can pursue them for repayment after they pay you.
Worker’s Compensation Claims
In Nevada, employers must have worker’s compensation insurance to cover benefits for employees injured at work, regardless of fault. If a third party is at fault for the injury, the workers’ compensation insurance can take legal action to recover the benefits paid by suing that third party. The injured worker can also file a lawsuit against the third party for workers’ compensation. If a settlement is made with the third party, the insurance may recover part of the settlement amount.
Nevada Subrogation Limitations
Your insurance company might face limits on the amount it can recover through a subrogation claim. Two key subrogation limitations include:
- Made the whole doctrine
- Common fund doctrine.
A personal injury lawyer can help ensure these limits protect your settlement or verdict.
The Made Whole Doctrine
The Made Whole doctrine restricts your insurance company’s subrogation rights when the at-fault party cannot fully cover the losses from the accident. If the funds are insufficient to cover your losses and pay back your insurer, you must be made whole first.
For example, Hailey is involved in a truck accident. Her health insurance pays $100,000 for her medical bills. Hailey total damages amount to $250,000. However, the at-fault party’s liability insurance only provides $80,000 in the settlement. Since Hailey is not “made whole” by the $80,000, she can use the doctrine to protect her settlement from her health insurer’s subrogation claim. However, many insurance companies have policy clauses stating that the Made Whole doctrine does not apply.
Most states allow these contract terms to override the doctrine. A personal injury lawyer might challenge these terms and use the made whole doctrine to safeguard your settlement.
The Common Fund doctrine
The common fund doctrine stops your insurance company from claiming their attorney fees from your settlement. This doctrine exists because your personal injury lawyers do all the work to obtain the settlement or verdict from the party at fault. It creates a common fund for your compensation and the insurer’s claim. It would be unfair for the insurance company to take their attorney fees from that fund.
The Benefits of Subrogation
Subrogation lets your insurance company recover the money spent on a claim, like repair costs, medical expenses, and deductibles, from the insurance of the person who caused the damage (if you weren’t at fault). This clause helps you and your insurer recover costs for damages caused by someone else.
Additionally, it leads to better loss ratios, increased profits, and more revenue for the insurer, along with greater customer satisfaction and protection. Below are other benefits for the policyholder:
- Risk transfer: When a subrogation claim is made, your insurance company is responsible for recovering losses.
- Lower insurance premiums: When subrogation claims succeed, insurance companies save money, reducing premiums for you.
- Less involvement: Your insurance company handles communication with the third-party insurer, sparing you from direct interactions and the hassle of court proceedings, mediation, and paperwork.
Factors Influencing the Subrogation Procedure
The duration of the subrogation process can vary widely based on specific details unique to each accident case. It can be quick if there is clear evidence of fault, the responsible party has insurance, and they accept the claim. However, this is not always the situation.
Several factors can influence how long the subrogation process takes:
- Who is responsible for the accident? If there is strong evidence that one party is mostly or entirely at fault, the subrogation process usually moves faster. If you disagree on the fault, the court or insurers must decide on the responsibility. It happens before completing a subrogation claim.
- Does the party at fault want to challenge the claim? If the at-fault party disagrees with the claim in an accident, the subrogation process can take much longer than usual. Even with clear proof of fault, refusing to pay adds complications that require more time to sort out.
- Does the at-fault party have insurance? Personal injury claims are simpler when all parties have insurance. If the responsible party lacks insurance, the injured person and their insurer may have to file a lawsuit to recover compensation. Lawsuits generally take longer to resolve than insurance claims.
Frequently Asked Questions
Below are some commonly asked questions about subrogation in Nevada:
What Can You Expect From a Subrogation Case?
There are various outcomes to expect from a subrogation case. Different scenarios can lead to different results, for example:
- If the third party is entirely at fault and has insurance, your insurance will seek full compensation from the third party’s insurer.
- If the third party is entirely at fault but does not have insurance, your insurance may take legal action against the driver. However, recovering your deductible may be less likely.
- If both parties share fault, there may be limits on how much your insurance can claim based on the degree of fault assigned to each driver. You might recover part of your deductible but not the entire amount.
Is Med-Pay Subject to Subrogation in Nevada?
In Nevada, Med-Pay coverage is not subject to subrogation. Some auto insurance policies include Med-Pay, which covers medical expenses after an accident. Nevada is one of the few states preventing insurance companies from reclaiming Med-Pay benefits.
The Nevada Supreme Court made a decision. It said insurance companies cannot collect Med-Pay premiums and then deny benefits. Denying benefits because you got money from other sources, like health insurance, is against public policy. The Court recognized that medical expenses can often be much higher than you might receive from Med-Pay or other sources.
Find a Personal Injury Attorney Near Me
Seeking compensation after an accident can be challenging, mainly when dealing with insurance companies and the complexities of subrogation. Our experienced personal injury lawyers at Las Vegas Personal Injury Attorney Law Firm are here to defend your rights and support you throughout the subrogation process. Whether you are negotiating with your insurance, dealing with fault issues, or seeking compensation for your damages, our team will focus on what matters most to you. Contact us at 702-996-1224 to discuss your personal injury case.
