Unraveling Subrogation After Accidents in New Jersey

An automobile or workplace accident in New Jersey can entangle you in a complicated web of legal and administrative complexities, including the concept of subrogation. An insurance company’s right to seek reimbursement for paying property or personal injury damages can be a lengthy process that affects your compensation. Likewise, the insurance company’s right to seek reimbursement applies in workers’ compensation cases when the injured worker also files a claim against a third-party and receives a financial award after the insurance company paid out workers’ compensation benefits. Here, we unravel the complexities of subrogation, including its meaning, purpose, functionality in claims involving work-related or personal injury accidents, and important implications for those injured in New Jersey.

The Meaning of Subrogation from a Legal Perspective

Subrogation is an insurance company’s right to reimbursement from an at-fault party for payments paid on your behalf. So, when your insurance company pays for property damage to your car under the terms of your insurance policy, the company may seek reimbursement for those payments from the individual (or their insurer) who caused the accident. 

The Purpose of Subrogation in Ensuring Fairness

The legal concept comes from the assumption of fairness in the law. Allowing insurance companies to “step into the shoes” of the insured to recover funds paid because of someone else’s injurious actions is fair. Moreover, since an insured can sue the party responsible for personal injury losses, the equity principle extends to the insurance company’s right to recoup their losses from the at-fault party and prevent the insured from a double payment.

The one who caused the damages should be held responsible for paying for any consequential damages. So, when an insurance company pays for car repairs, medical bills, and pharmacy expenses, or workers’ compensation insurance pays for a worker’s wages, the insurers can demand payment for their losses from the negligent driver or third-party supplier whose product injured the worker.

How Subrogation Shapes Outcomes of New Jersey Auto Accident Claims

When you have a car accident in New Jersey, you must report it to your insurance company to make a claim. When your coverage includes liability and rental reimbursement provisions, an adjustor will appraise and evaluate the damage to your vehicle and investigate the details of the accident, including who is at fault. If your car is not a total loss, the insurance company will pay for your vehicle repairs less the deductible amount. You can get reimbursement for your deductible and other immediate expenses your insurance does not cover from the responsible party’s insurer or when the case resolves. 

After payment for medical expenses, an auto or health insurer can exercise its subrogation rights. Medical costs and property damage payouts are subject to subrogation, which includes the right to reimbursement for paid hospital, therapy, physician, and car repair bills. While your insurance company’s role is to pay you for damages covered under your insurance policy, they are also investigators. They appraise property damage, gathering evidence of damages by photos and physical examination in some cases. Your insurer investigates the accident cause by looking at the physical evidence, reading the police report (if any), and taking statements from you and other witnesses to the accident. 

Insurers of the other parties involved do the same for their insured, from taking a claim, investigating it, and establishing fault. When liability is clear and undeniable, the at-fault driver’s insurer may offer a settlement to resolve the claim, pay some of the damages pending further investigation, or deny fault and refuse payment to other parties involved in the accident.  Both insurance companies are responsible for negotiating a settlement, if possible, after the conclusion of the investigation, the medical stability of the injured parties, and payouts on policies for covered losses. In other words, when the damage calculations are complete, the settlement negotiations begin.

Comprehending the Role of Subrogation in NJ Workers’ Compensation Cases

In the workers’ compensation context, an employee injured on the job can claim medical benefits and wage losses against the employer’s workers’ compensation carrier. When the work injury occurred because of a third party’s negligence, the workers’ insurance carrier can recoup their losses once an injured worker receives payment from the third party for their damages. The employee injured by a third party causing a dangerous condition on the employer’s site can collect workers’ compensation benefits and sue the third party for negligence. So, when a warehousing company purchases defective forklifts and an employee is injured, the forklift manufacturer is a third party liable for the damages. The employee can sue the manufacturer and draw benefits from the employer’s workers’ compensation.

Under N.J.S.A. § 34:15-40, the employee can sue the third party without jeopardizing their workers’ compensation claim. However, the employer can assert subrogation rights and place a lien against any recovery from the third-party lawsuit. Also, the employer can sue and file a subrogation claim against the third party even if the employee does not, in order to recoup the payments they already made to the employee, which should be the responsibility of the third party at fault. You must clear the subrogation claim before resolving your personal injury or worker’s compensation claim to avoid having to pay it after you settle your claim.

Avoid Unexpected Effects of Subrogation on Your Claim

Insurance subrogation claims should figure into your compensation award calculations so you get complete recovery for your losses. Configuring and paying subrogation claims may delay your settlement. Thus, you need to consider insurance company subrogation rights before agreeing to any settlement. Your insurance policy determines subrogation rights, so knowing your policy terms and how they affect your claim is essential.  For example, the at-fault insurance company may offer to settle your claim by covering most of your medical and other personal injury out-of-pocket expenses plus a minimal amount for your other damages, such as pain and suffering. With the understanding that your insurer will seek reimbursement from your settlement, you want to ensure that you are not in deficit when accepting the offered amount and are fully compensated. 

Fundamentals of Subrogation and Its Effects on Workers' Comp and Personal Injury Claims in NJ

You can negotiate with your insurer to lower the subrogation amount. Many insurers will take a lower amount than the full payments made on your behalf. You may want to negotiate a more favorable reimbursement payment before settling your claim.

Speak with a New Jersey Attorney who can Transform Complex Subrogation Challenges Into Strategic Opportunities for Maximum Compensation and Fairness

Negotiating subrogation takes confidence and legal knowledge. Negotiation is where our experienced New Jersey personal injury and workers’ compensation attorneys at Cohen & Riechelson can help. When you consult with our knowledgeable team of lawyers, you will learn how your policy subrogation terms affect your claim. Additionally, we can protect you against an insurance company’s unfair practices in claiming subrogation rights, such as violating its own subrogation procedures, claiming reimbursement without policy subrogation rights, or ignoring an existing waiver of subrogation rights.

Our accomplished personal injury and workers’ compensation lawyers regularly negotiate with insurance companies to resolve these claims, and we can often persuade them to agree to a less than the total subrogation claim by establishing how exactly we secured the settlement amount. Most insurance companies understand they cannot bully skilled legal professionals who won’t back down to their tactics. They are more likely to deal fairly with a lawyer under threat of litigation.

For your protection, ask our talented law firm with over 50 years of experience to assist you with your personal injury, workers’ compensation, and/or insurer’s subrogation claim in Edison, Princeton, Hamilton, Trenton, Camden, Burlington, New Brunswick, South Brunswick, Lawrence, Mount Laurel, Cherry Hill, Mercer County, Middlesex County, Burlington County, Camden County, and throughout New Jersey. Start by speaking with us today in a free consultation at (609) 528-2596, or fill out our online form to learn more about how we can help.