If you know what Subrogation means, you have probably worked in the insurance &/or recovery industries. Or, you’ve been involved in a case where an insurance agent or attorney has tried to determine who was really at fault for your injuries or property loss.
If you work for a law firm that is moving into subrogation, you might find yourself faced with several terms you are not familiar with. Then, once you do become familiar with them, be careful how you use them when talking or writing to clients. Attorneys have a reputation for filling documents and even conversations with legal jargon or words that are very specific to their profession and not easily understood. Terms related to the process of subrogation are even less familiar to the general public.
The subrogation recovery industry includes multiple lines of business, e.g., auto recovery, fire/property recovery, healthcare and workers’ compensation, etc. Within each of these areas, there is an additional distinction as to whether the loss is insured, partially insured or uninsured. Subrogation is most often used in insurance settings.
Different areas of subrogation may have basic terminology that applies only to that specialty. For example, engineering subrogation professionals need to be conversant with such terms as lateral load, gravity load, dead load, live load, etc.
10 General Terms Used in Relationship to Subrogation
- Subrogation: Literally, one person or party stands in the place of another. In insurance cases, the insurer is trying to determine whether a third party may be financially responsible for an injury or loss so they can recoup what they paid to the insured.
- Indemnity: Compensation paid by one party to another party in respect of a particular loss sustained by the receiving party. The indemnitor (the party who pays the compensation) does not have to be responsible for the loss of the other party, though they may be.
- Assignment: Once an insurance company pays you for a loss or injury, the claim against whoever caused the loss is transferred from you to your insurance company. The insurance company then has the right to recover those payments.
- Collateral Source: The innocent party who “steps into the shoes” of the injured party. Any legal defenses that could be used against the injured party may also be asserted against the collateral source provider.
- Stepping into Your Shoes: When your insurer makes a claim in your name against a responsible party just as if you were bringing the suit yourself. This usually occurs after the insurance company has paid you for your loss.
- Double Recovery: An injured party should recover only the actual damages they have incurred, but should not be allowed to profit from their loss by recovering it from more than one source.
- Obligee: The individual to whom a particular debt or obligation is owed by the obligor. The term obligee is often used synonymously with creditor.
- Obligor: The individual who owes another person (obligee) a certain debt obligation. The term obligor is often used interchangeably with debtor.
- Waver of Subrogation: An agreement between two parties in which one party agrees to waive subrogation rights against another in the event of a loss. The intent of the waiver is to prevent one party’s insurer from pursuing subrogation against the other party.
- Endorsement: Typically, an endorsement is an added provision to an insurance policy, referred to as a rider, though it can also include additional options such as various license endorsements.
If you deal with victims of injury or property loss and are being bombarded by various parties asserting subrogation rights, you should consult an attorney who understands the subrogation laws in your state. The National List can recommend a vetted attorney who specializes in subrogation cases. Visit our website at www.nationallist.com or call us at 800.227.1675. If you want to grow your subrogation business, talk to us and learn the benefits of joining The National List of Attorneys.