Subrogation In Texas Auto Claims

Texas Insurance Code, art. 5.06-1 and the particular policy’s “Right to Recover Payment clause create a statutory and contractual right of subrogation against a third party motorist to recover uninsured and underinsured payments the insurance company makes to its customer. If the insurance company makes a payment to any person under this coverage, the insurance company is entitled to recover up to the amount of the payment from the proceeds of any judgement or settlement with the person. This is spelled out in art.5.06(6).

The result of this rule is that a person who collects uninsured or underinsured benefits from their insurance company as the result of someone else’s negligent actions in a car wreck type of situation, cannot turn around and sue that individual. Or, if you do sue the responsible party and they are successful in collecting money from that individual, then they must pay back the insurance company for the benefits they have paid on the insured persons behalf. This of course is limited to paying the insurance company back only up to the amount they have paid out. Any excess would belong to the injured, insurance company customer. The purpose of this rule is to prevent a double recovery by the injured party.

What happens most of the time in real life is that the injured, not at fault person, makes a claim against the person who caused the injury. The injured person then discovers that the atfault person is either uninsured or underinsured. They then make the uninsured or underinsured claim against their own insurance company. Rarely, or almost never does the injured party pursue a further claim against the atfault party. However, the insurance company that paid the benefits will do an asset check on the atfault party and make a determination as to whether or not it is financially worthwhile to pursue the atfault party.

There are some legal loop holes to jump through to properly make these types of claims. If they are not pursued properly the insured person risks losing some of their benefits and for this reason need to seek the advice of an experienced Insurance Lawyer Attorney.

One advantage that a policy holder has when making a claim for uninsured or underinsured benefits is that the policy holder does not have to prove the atfault person is uninsured or underinsured. It is the burden of the insurance company to prove the atfault person is not uninsured or underinsured. This burden is placed on the insurance company by art. 5.06-1(7).