Most of our clients have never heard of the term “subrogation”, and they are shocked to learn that subrogation can significantly reduce the amount of your insurance settlement that you will receive. So what is subrogation, and how are attorneys able to reduce subrogation and increase what their clients put in the bank?
In Washington State, when an insurance company pays out benefits for a claim, that insurance company is entitled to recover all of the money that they have paid out for the medical treatment and loss of wages on behalf of the injured person. This is subrogation - your insurance company’s right to seek recovery for expenses it’s paid due to the negligence of the driver that hit you.
This isn’t fair!!
And this is the point where people get upset. It seems unfair that, after paying insurance premiums for years, a person is expected to pay back the benefits paid out by their insurance company to repair an injury that is no fault of their own. Shouldn’t the at-fault party have to pay for this? Here is the concept behind subrogation: but for the other person’s negligence, your insurance company would not have had to pay any medical bills. Your insurance company will honor their obligation and pay for your medical bills (hopefully!), but they protect themselves by getting reimbursed for those payments.
What is Mahler reduction and why can only attorneys get this for you?
In Washington, the amount you must pay back to your insurer is reduced based upon your attorney fees and costs. This reduction, known as a Mahler reduction, says that your insurance company must reduce the amount sought based on your attorney fees. In most instances, the Mahler reduction results in a 1/3 reduction of the amount you owe your health or auto insurer. You can only get this reduction if you have hired an attorney. This Mahler reduction significantly increases the portion of your settlement you get to keep.