insurance policy

The Law of Subrogation and Why It Should Matter to You

If you have insurance coverage and get involved in an accident in which you sustain an injury, your insurance will most likely come in and help you settle your medical bills. This is the general flow of events. However, in some cases, particularly where you, as the injured or aggrieved party, file a claim against the at-fault driver, for instance, your insurance may file a claim against your lawsuit to receive reimbursement for benefits it paid to you. The right to the pursuit of such reimbursement is known as subrogation.

Subrogation laws in their definitive state have been applied widely in the United States for years. The rationale behind the doctrine was to protect insurance companies from incurring costs that they are not liable for. The subrogation law worked in Colorado until 2010 when the Colorado Revised Statute 10-1-135 was passed.

Colorado Made Whole Doctrine

When an injured victim goes ahead to file a suit to recover damages or approach the at-fault party for settlement, it is not guaranteed to obtain full compensation. In this circumstance, the injured victim has the legal right to retain all the judgment or settlement proceeds save for ancillary costs so long as he can show that he was not satisfactorily compensated, or rather, made whole.

Initially, regardless of the number of benefits received from the insurance company, even if it was more significant than the compensation acquired from the defendant, the injured party was made to pay by law. However, the new regulation allowed victims to retain the total amount, especially in circumstances where they had to settle for an amount equivalent to the defendant’s policy limit.

The Colorado Common Fund Doctrine

A regulator to the intention behind the Made Whole Doctrine is the Common Fund Doctrine. Here, even in circumstances where insurance companies can execute the subrogation claim, this rule ensures that it is not averse to the financial welfare of the victim.

The doctrine propounds that the percentage of claim available to the insurance company via subrogation should be equivalent to the portion parted with by the victim in settlement of lawyer fees (Colorado Subrogation Law, n.d.). With this in place, insurance companies do not exploit victims financially.

Practices in Other States

Subrogation laws have been modified in several states whereby a hybrid version of the Made Whole Doctrine is applied. For example, in South Carolina, the insurance company can only recover from the defendant up to the amount it paid to the victim as benefits from the injury (Matthiesen, Wickert & Lehrer, S.C. Attorneys At Law, n.d.). This is a modification put in place to ensure that the insurer is not unduly denied some level of reimbursement.

What Does This Mean for You?

Subrogation law is generally geared towards defending the insurance companies’ interests. It ensures that third-party individuals do not suffer losses that they did not occasion. However, without the Made Whole Doctrine and the Common Fund Doctrine, this law is potentially burdensome on the victim’s part. This could carry negative implications for the emotional health of the claimant.

You Are Safe with Us

The two remedies in the Colorado Subrogation Law, the Made Whole Doctrine and Common Fund Doctrine, combine to level the playing field for all the parties involved. Justice is promised when these rules are applied. It is vital that you equip yourself with this knowledge and seek professional advice where necessary to ensure that your rights are well protected and upheld. At The Brown Law Firm, LLC, we are here for you whenever you need top-notch legal representation or advice. We are located along 100 Park Avenue, Suite 202, Steamboat Springs, Colorado (The Brown Law Firm, n.d.). Our attorney services are available on 970-871-7400. Find us on our website as well.

Works Cited

Colorado Subrogation Law. (n.d.). Retrieved from The Fang Law Firm:

The Brown Law Firm. (n.d.). Retrieved from Steamboat Springs Criminal Defense Attorneys BOLDLY FIGHTING FOR JUSTICE:

Matthiesen, Wickert & Lehrer, S.C. Attorneys At Law. (n.d.). Retrieved from South Carolina:,-South%20Carolina%20case&text=application%20of%20S.C.-,St.,liable%20third%20party.%E2%80%9D%20Id.