Why Do I Have To Pay Back My Insurance Company?

Subrogation is a legal term for the amount you have to pay an insurance company back from your settlement.

“Wait, what? Why do I have to pay back the insurance company?”

We’ve had this conversation with our clients dozens of times. You pay your premiums. Those premiums are supposed to be the price you pay so your insurance company will cover you when you have damages. The law, however, gives insurance companies an extra benefit. If your own insurance company pays out benefits because of the fault of someone else, then you have to pay back your own insurance company.

If you ask the insurance companies, they have an explanation of why this is all good and right and lowers your premiums. This may seem unfair, but it is the law.

For example, say you have Personal Injury Protection (PIP) coverage in the amount of $10,000.00. You use this coverage to pay your emergency room visit, your ambulance, and some physical therapy. You use up the full amount, which is surprisingly easy. If your case is worth $20,000.00 total, then you would have to pay back $10,000.00 to your own insurance company.

In Washington, fortunately, there are many laws and cases that take some of the bite out of this policy. The actual amount you would have to pay back is less than the full $10,000 in nearly every case. This applies to all kinds of insurance, including health insurance, and government programs like Medicare and Medicaid.

Most types of insurance have their own rules about repayment. Typically, the insurance company will need to take a reduction to pay towards your attorney’s fees and costs. However, there are times when they won’t. It takes an expert in this area to navigate the various options so you only pay the insurance company back as little as possible under the law. There can be stiff penalties for failing to comply with these rules, and it is important to have experts like Herrmann Law Group to help you navigate this process.

Herrmann Law Group has been successfully resolving these issues for over 70 years. Karl Herrmann, the firm’s founder, was the elected Washington State Insurance Commissioner who started no-fault benefits such as PIP.

Please contact Herrmann Law Group if you’re involved in an auto accident. You should not pay your insurance company any more of your settlement money than necessary.