On May 1, 6:41 am, b...@nyx.net (Barry Gold) wrote:
[in reply to my post asserting that in settling most first party insurance claims, the insurer has the exclusive primary right to sue the responsible third party in insured's name]
> I suppose that's possible if the policy language is written that way,
> but the policies I've seen do _not_ sign away the insured's right to
> sue the other driver. Instead, it gives the insurer the right of
> "subrogation:" if the insured sues and wins, the company is entitled
> to get back (some of) what it paid the insured.
Correct, if we were dealing with a typical health insurance policy; but that's not what a "right of subrogation" means in this context of first party auto claims.
There are at least two kinds of subrogation, equitable and contractual. Even if an insurance policy is silent on the issue, equitable subrogation applies, and allows anyone who has paid an obligation which another should have paid, to be indemnified by that other person. In other words, equity requires that the debt ultimately lie with the person who in good conscience ought to pay it, and so it allows the person who has paid that debt (although not ultimately responsible for it) to be indemnified by the one who _is_ ultimately responsible, i.e. the tortfeasor who caused the loss. Thus, when your own insurance company (who, after all, is not the one who caused your loss) pays that debt which, in good conscience, the guy who ran into you should have paid, the insurance company is equitably subrogated to your claim against the other driver and "steps into your shoes" to have the right to reimbursement for that loss from the tortious driver.
That _equitable_ subrogation does not extinguish the victim's primary right to sue in his own name, although it requires the person suing in his own name to reimburse the person who is subrogated to his claim if and when he does win something on that claim. This is, in fact, what generally happens with health insurance subrogation claims; Blue Cross or whoever is not going to go out and sue whomever they think caused the accident that led to your receiving medical treatment, but if _you_ do sue someone for injuring you and win, then Blue Cross is subrogated to your claim and is entitled to be reimbursed for the health insurance benefits they paid to you, before any of that third party recovery goes into your own pocket.
But a contractual right of subrogation goes further. As in OP's policy, they typically provide that "we are entitled to _all_ the rights of recovery of the [insured] person to whom payment was made against another [responsible third party]." That is, the insurance company is _exclusively_ entitled to pursue those rights, and thus the insured no longer has any right to do so (unless the insurer waives its rights in favor of the insured). THis is further shown by the requirement that the insured "must sign and deliver to [the insurer] any legal papers relating to that recovery, do whatever else is necessary to help [the insurer] exercise those rights and _do_nothing_ after loss to prejudice [the insurer's] rights."
That is, they _require_ the insured to "do nothing" with regard to the claim on which benefits were paid, except to follow instructions from the insurer in order to help the insurer. Pursuing a claim on his own, and/or settling that claim without having fully reimbursed the insurer first, would be exactly the kind of action in prejudice of the insurer's rights that the policy language forbids, because once the insured guy with the bent fender settles his (deductible) claim with the bad driver, and the bad driver obtains a release of liability (or an order of satisfaction of judgment) from the (insured) guy who sued him, the insurer can no longer pursue its subrogated claim for its portion of the loss -- because the defendant has been released from further liability.
Incidentally, that is of course the same reason the insured can no longer pursue a separate claim even _after_ the insurer has received a settlement or verdict -- not because it would prejudice hte insurer's rights any more, but because he doesn't have a claim against the bad driver anymore. Once the insurer is done with _its_ claim, the bad driver has been released from liability for the claim (if done before trial) or has already been tried once to a final judgment, so that any future suit arising from the same subject matter of the original claim is barred and subject to dismissal under the principle of _res_judicata_.
> So, no, in most cases the insurer cannot settle the claim without the
> injured party's consent, any more than your lawyer can settle your
> claim if you're not satisfied with the offer.
Yes they can. The difference is that the lawyer is merely acting as the agent for his client, who as principal must ultimately approve any settlement; but the auto insurer with a broad contractual right of subrogation is not a mere agent -- in effect it "owns" the third party claim formerly belonging to the insured, by virtue of having paid first party benefits under the collision or UM portions of its policy. So the insurer calls the shots on whether to sue, when and where to sue, how much to sue for, and how much to settle for, because the claim then belongs to the insurer, not to the insured. Although, as mentioned, "there's no harm in asking", and if the iunsurer decides not to pursue its subrogation rights, it can waive those rights in favor of the insured, which lets the insured go ahead and file his own suit to try to collect his deductible.
Usually, though, if the insurer decides not to sue, it's because they (with all their resources) have already decided that the bad guy is "judgment proof" -- they can't squeeze blood from a turnip, so to speak. So the pro se insured, pursuing his own small claims action for return of his deductible, is not likely to have much better luck actually collecting any money from the uninsured deadbeat, even if he wins a verdict that makes him feel better and that he can then use for wallpaper.
--
This posting is for discussion purposes, not professional advice.
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Mike Jacobs
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