I pay for health insurance, why do I need to reimburse my health insurer from my settlement?

By: Emma Neynens, Associate Lawyer

If you have private health insurance (i.e. Medavie Blue Cross or Great-West Life) and you require treatment or aids secondary to injuries sustained in a motor vehicle accident, you have to consider the insurers right to subrogate.

When you require treatment or aids secondary to injuries sustained in a motor vehicle accident, you first have to submit those expenses to your private insurer. If it is not covered by your private insurer, or your private insurance is exhausted (i.e. limit of $500 for physiotherapy per calendar year), it can be claimed against your automobile insurer (Section B). If it is not covered by Section B, it can be claimed against Section A. The amount that is covered by your private insurer, is the amount that is subject to subrogation.

The right to subrogate arises from either the terms of your private insurance policy or the common law. Subrogation is the assumption of your private insurer’s legal right to recover against the party responsible for causing the accident in which you suffered injuries requiring treatment. Your private insurer is eligible to recover against the responsible party because if that party had not caused the accident, you would not require treatment and aids for your injuries, and the private insurer would not have paid any amounts for those treatment and aids. In the same way that you have the right to claim for amounts you spend secondary to the accident against the party responsible, so does your private insurer.

A common misconception is that you are paying back your private insurer from your settlement. However, the fact is that the claim of the private insurer is added to your claim for damages. So, for example, if your claim for damages is $20,000 and your private insurer paid for $2,500 of treatment as a result of the accident, the claim made against the party responsible is $20,000 + $2,500 for a total of $22,500. Therefore, you are not paying your private insurer from your settlement, you are just advancing your private insurer’s claim in addition to your own claim and the party responsible pays the subrogation in addition to your claim for damages with one settlement cheque.

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