Here is how subrogation works, how it is different in Missouri, and what it means for victims of car accidents.
An Example: A Pedestrian Accident Outside St. Joseph
It is easiest to understand a complex legal issue like subrogation with an example.
A good example is a pedestrian accident that happened late at night on June 2, 2020. Two teenagers from St. Joseph were crossing Route MM south of the town of Faucett when they were hit by a car. Both teens were seriously hurt and were flown to the hospital in a helicopter.
Because their injuries seem to be significant, they are each likely to accrue tens of thousands of dollars in medical bills from the incident. If the teens have health insurance, though, it would be their insurance company that pays the bill.
Subrogation Lets Another Party Pursue Your Personal Injury Case
In cases where a victim is hurt by the negligence of someone else, and then the victim’s medical expenses are covered by their insurance company, it is the insurance company that has suffered the financial setback.
This is where the legal idea of subrogation comes into play.
Subrogation allows a third party, often an insurance company, to pursue a victim’s personal injury claim on their behalf.
In the case of this accident involving the young pedestrians from St. Joseph, subrogation would allow the teens’ insurance company to file the teens’ lawsuit against the driver who hit them, demanding that the driver compensate the insurance company for the medical bills it has covered.
Missouri’s Strange Stance on Subrogation
In most states, subrogation is allowed except in certain rare circumstances.
In Missouri, though, the rule is that subrogation is not allowed, unless an exception applies. One of those exceptions, however, is that the right to subrogation is explicitly written into the insurance policy. Because it is in the power of the health insurance company to include this provision in their policies, and because it is in their interest to include it, the practical effect is that, in spite of Missouri’s general rule against subrogation, most insurance policies let it happen, anyway.
What Does This Mean for Victims?
Subrogation seems to mean that victims of car accidents might as well not even file a lawsuit. If these two teens who were hit by a car each accumulate $100,000 in medical bills, but only pay $1,000 out of their own pocket before their insurance policy’s deductable kicks in, then filing a personal injury lawsuit and being awarded $100,000 in compensation would result in nearly all of that, $99,000, going to the insurance company through subrogation. The teens would only recover the $1,000 that they paid out of their own pocket.
However, subrogation does not impact all of the types of compensation that victims need after a car crash. Things like pain and suffering and emotional distress are not covered by subrogation because insurance companies do not pay for it in their policies.